Anticipates Trade Agreement with US, According to Merz
Trade War with USA: Can It Be Averted Before July 9th?
Is a real trade war with the USA still avoidable? Chancellor Friedrich Merz remains hopeful, especially for sectors crucial to Germany, after discussions at the G7 summit.
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Kananaskis - Federal Chancellor Friedrich Merz anticipates a trade deal with the USA by July 9th but not all-encompassing. "I am confident we can reach an agreement," commented the CDU politician on the sidelines of the G7 summit in Canada, speaking with ZDF. Though it won't be "a sweeping agreement," it will only involve major industries.
Merz emphasized the significance of these industries for the German economy, specifically mentioning the automotive sector as an example. "We need a swift resolution here, or else it will simply become too pricey," he said, referring to the 25 percent import tariffs initiated by Trump.
Economic Impact of the Trade War
The trade war between the USA and EU poses significant financial consequences. Trump's tariffs, intended to correct alleged trade imbalances, shift production to the USA, and finance tax cuts, have been viewed as unjustified and incompatible with the rules of the World Trade Organization (WTO) by the EU.
Merz re-iterated that negotiations on behalf of all member states are led by the EU. He asserted that no single state can reach an agreement, such as the UK. Commission President Ursula von der Leyen, though modest about the negotiating status, described negotiations as complex given the vast trade relations between the USA and EU, with commerce valued at approximately 1.5 trillion euros annually.
Negotiations and Counter-Measures
The EU aims to change the USA's course through ongoing negotiations and has been granted respite by Trump on certain tariffs. This ceasefire expires on July 9th. Merz stated that negotiations are proceeding step by step, with the EU prepared to take decisive action against US tariffs if negotiations prove unsuccessful. This action will include counter-tariffs.
Recent negotiations have reportedly made progress, and the EU is currently refraining from retaliatory tariff measures despite the US increasing tariffs on steel and aluminum from 25% to 50% as of June 4, 2025. However, US leadership expressed dissatisfaction with the current state of negotiations, and President Trump himself stated that negotiations are ongoing but the EU is yet to offer a fair deal.
If negotiations fail, the trade war would significantly affect several key industries, including steel, aluminum, automotive, various manufactured goods, and technology sectors, impacted by regulatory differences.
In conclusion, while negotiations continue and some progress has been made, resolving the U.S.-EU trade war before July 9, 2025 remains uncertain due to deep disagreements on tariffs and trade conditions. If resolved, the principal industries affected will be the steel, automotive, manufacturing, and technology sectors, impacted by regulatory discrepancies.
- Chancellor Friedrich Merz has indicated that a trade deal with the USA may be reached by July 9th, but it will not cover all sectors and is likely to focus on industries critical to Germany's economy, such as the automotive sector.
- The EU has been in negotiations with the USA to avoid a trade war and has been granted a reprieve on certain tariffs until July 9th. If negotiations are unsuccessful, counter-tariffs could be enacted, potentially impacting key industries like steel, automotive, manufacturing, and technology.
