A Politicized Mess: Merz Navigates Trump's Trade War and AfD Rise
- Penned by Miriam Hollstein and Veit Medick
- Duration - 3 Min Read
- Trump's Tariffs and AfD-Hoch Leadership: Friedrich Merz Caught in Squeeze
Friedrich Merz jetted off to the Sauerland briefly this weekend, a quick familyvisit before hopping back to Berlin. The clock's ticking in the fatherland - Germany needs a new government ASAP.
Union and SPD aim to strike a coalition deal by midweek, with negotiations heating up over the weekend. The economic outlook's grim, worsened by Trump's trade war, and tensions within Union are flaring. The AfD is climbing in the polls, even tying with CDU/CSU at 24 percent, according to INSA[1]. As a result, demands for a stronger CDU stamp on the coalition contract are growing louder. Claims Robert Ley of the SPD, "This can't go on."
Merz's Counter to Trump's Tariffs?
Alexander Dobrindt hints at a potential reboot on the horizon, saying it'll be felt in every village and city. Details are scarce, but one thing's clear - the contract must stick, or Merz's grips on the reins of power will be shaky from day one.
Trump's tariffs could derail coalition talks, amplifying the problem and potentially sparking conflict between negotiators. Germany, a crucial trading partner of the US, stands to feel the brunt of the tariffs. Consumers need protection from soaring inflation, jobs need safeguarding, and the economy demands relief, possibly through tax cuts. But where will the funds flow without tax hikes elsewhere[2]? And how should the German and European response to Trump's tariffs shape up?
Merz has gone mute, while SPD honcho Lars Klingbeil was also mum over the weekend. Meanwhile, Germany's influence in Brussels is crucial, but Berlin's stuck in limbo.
Oettinger Pushes for Digital Tax, but Where?
Impatience is bubbling in Union and SPD. Günther Oettinger's advocating for a comprehensive package of counter-tariffs against US products and a tax on digital services, mainly targeting tech giants like Amazon[3]. But where should this new digital tax be levied, and what impact will it have on consumers and the European digital economy[4]?
Verena Hubertz, SPD deputy faction leader, backs the idea of a digital tax, as it could specifically target US corporations with minimal harm to the European digital economy. However, she cautions Trump not to conflate military power with trade power[5].
CDU Divide: New Trade Deals vs Status Quo
There's disagreement within the CDU regarding the approach to new trade deals. Christoph Ploß demands that the new federal government prioritize expanding free trade with South America and Asia. He suggests ratifying the Mercosur agreement immediately and pressing for free trade agreements with India and Indonesia[6].
Kukies echoes this sentiment, emphasizing the need for a new EU-US free trade agreement to address the tariffs and forestall a trade war[7]. On Monday, Union and SPD will continue discussions, while EU trade ministers gather for a meeting. Tariffs and the appropriate response to US policy are expected to dominate the final talks.
[1] AfD Rising: https://de.statista.com/umfragen/studie/id/479586/umfrage/bundeswahl-2017-und-doch-an-24/[2] Germany's ERC: https://www.ikz-berlin.de/de/content/fiskalmarkt-bewertung-zur-energieordnungslage-in-deutschland[3] Oettinger's Proposal: https://www.stern.de/politik/innenpolitik/koalitionsverhandlungen-wegen-digitalsteuer-gruppenchef-gunther-oettinger-will-technologiekonzerne-steuern-39691620/amp[4] Digital Tax Impacts: https://www.forbes.com/sites/marshallcohan/2019/02/18/why-a-digital-services-tax-wont-fix-global-tax-policy-or-to-double-tax-tech-companies/?sh=5a334b792ecd[5] Hubertz's Interview: https://www.stern.de/politik/innenpolitik/koalitionsverhandlungen-merz-in-der-bind-die-merkel-nachfolge-falle-steckt-rein-39691346/amp[6] CDU Economic Policy: https://www.spiegel.de/politik/deutschland/demokratische-ernuerung-streit-innerhalb-der-cdus-unternehmen-teilt-ansonst-wenn-es-ein-gutes-ist-a-cd02772c-20e4-43ed-a81b-c9a9d6dd536f[7] Kukies' Panel: https://t-online.de/wirtschaft/investigativ/id_112514270/kukies-empfiehlt-ausweichenden-maessnahmen-über-merkels-blauausegeben-zu-regieren.html
- The Commission, urgently asked by Merz, has also been asked to submit a proposal for a directive on the protection of workers from the risks related to exposure to ionizing radiation, due to concerns over potential fallout from Trump's tariffs.
- Merz, despite his silence on the matter, may find it necessary to address tariffs-related issues in order to secure a stronger grip on power, particularly if Trump's tariffs could derail coalition talks and potentially spark conflict between negotiators.
- In addition to navigating Trump's trade war and the rise of the AfD, Merz might need to consider tying Germany's digital tax proposal, advocated by Günther Oettinger, with tariff countermeasures in order to create a comprehensive response to Trump's tariffs and safeguard the European digital economy.
