by Xinhua author Li Hanlin
BERLIN, July 25 (Xinhua) — Germany is signaling a shift in commerce stance towards the United States, as U.S. President Donald Trump plans to slap 30 % tariffs on a variety of EU items beginning Aug. 1. Once a key advocate of negotiation inside the bloc, Germany is now adopting a firmer tone, aligning extra intently with France in calling for a stronger response.
Experts famous that the shift mirrored mounting frustration with the Trump administration’s unilateral calls for and a shrinking area for compromise. It might assist the EU shut ranks and pave the best way for a extra unified commerce technique within the weeks forward.
GERMANY STANDS OUT
The change got here after Trump introduced plans to impose a 30 % tariff on EU imports, citing what he known as “non-reciprocal” commerce practices and obstacles. The new levy would come on high of current tariffs of as much as 50 % on EU metal and aluminum, and 25 % on autos.
According to the Financial Times, Trump can be pushing to set a 15 % to twenty % minimal tariff threshold in any potential settlement, effectively above the earlier EU baseline of round 10 %. One senior EU diplomat mentioned such a requirement may depart Brussels with no choice however to contemplate sturdy countermeasures.
The shift in tone has been significantly stark in Germany, the place officers have expressed rising frustration with the U.S. method. Germany was reportedly “infuriated” after studying that Trump administration not solely rejected concessions on car tariffs but additionally sought to boost baseline charges.
German Chancellor Friedrich Merz, who had beforehand advocated a negotiated resolution, warned that escalating tariffs may severely hurt Germany’s export-reliant economic system.
Vice Chancellor and Finance Minister Lars Klingbeil, talking on the sidelines of the G20 finance ministers’ assembly final week, declared: “There will be no deal at any price. There should be no victory at any price.”
The European Commission is now weighing whether or not to activate its Anti-Coercion Instrument if talks fail earlier than Aug. 1. The mechanism, by no means beforehand used, would permit the EU to impose commerce and funding restrictions in response to financial strain from third nations. Germany formally expressed help for the device on July 18, in line with The Wall Street Journal.
MOUNTING ECONOMIC PRESSURE
Germany, the EU’s largest economic system, is already feeling the strain from rising commerce tensions with the United States.
The nation depends closely on exports to the United States, its high export market, significantly in high-value sectors reminiscent of autos, equipment, chemical compounds and prescribed drugs.
That reliance is now turning right into a legal responsibility. German exports to the United States fell 7.7 % in May, hitting the bottom stage in over three years, in line with knowledge from the German Federal Statistical Office. Imports from the United States dropped 10.7 % in the identical interval.
Germany’s economic system contracted in each 2023 and 2024. Several institutes have lower 2025 development expectations to zero, citing U.S. commerce coverage as a key danger.
A report from the nation’s Macroeconomic Policy Institute warned {that a} 30 % tariff hike by the United States may stall German development in 2025, limiting 2026 enlargement to round 1.2 %. The United States accounts for almost 10 % of Germany’s whole exports. Any additional drop in American demand may considerably weaken Germany’s already fragile restoration.
“If Trump’s tariff plan moves ahead, we estimate it could cut 0.5 to 0.6 percentage points from GDP,” mentioned Moritz Schularick, president of the Kiel Institute for the World Economy.
Zheng Chunrong, director of the Center for German Studies at China’s Tongji University, famous that Germany’s long-standing choice for dialogue and free commerce inside the EU is being examined as financial vulnerability persists and Washington’s strain mounts.
Zheng mentioned the German authorities’s reassessment of its commerce stance displays rising issues that any additional escalation may derail the delicate restoration pursued by the nation’s new administration.
STRATEGIC CALCULUS
Experts famous that the Trump administration’s use of tariffs as leverage displays a broader transactional method to overseas coverage, usually in comparison with financial blackmail. In response, commerce companions together with Brazil, Japan and the EU have begun pushing again, adopting firmer positions to defend their pursuits.
Juergen Matthes, an knowledgeable on the German Economic Institute, argued that Trump might be overestimating his leverage. The knowledgeable mentioned greater than half of U.S. imports are intermediate items, and plenty of of German-made industrial gear have few viable substitutes within the United States.
German companies in sectors reminiscent of equipment, electronics, chemical compounds and prescribed drugs have sturdy pricing energy. Matthes mentioned, including they’re prone to go larger tariff prices on to American consumers.
Germany’s harder tone displays rising frustration as talks with Washington stall, analysts mentioned. While Berlin nonetheless prefers a negotiated end result, it’s now getting ready to push again if wanted.
Still, each side have left the door open. U.S. Commerce Secretary Howard Lutnick not too long ago mentioned a deal stays doable. The European Commission additionally reaffirmed on July 20 its dedication to dialogue.
Germany’s shift may additionally form EU’s inner dynamics. A champion of free commerce and institutional predictability, Germany’s harder stance might affect extra member states to help a coordinated and agency response to U.S. strain.