German Finance Minister Jörg Kukies said on Wednesday that the new tariffs, which US President Donald Trump is expected to announce later in the day, would hurt on both sides of the Atlantic.
“It will also hit US consumers very hard because cars will get more expensive in the United States, including the cars produced by German automakers in the United States,” Kukies told DW.
He added that German automakers produce many more cars in their factories in the United States than they import from Europe, so the disproportionate effect will be in the United States. “It will be a substantial adverse impact for everyone affected,” Kukies warned.
However, the minister told DW that the German government assumes that today’s announcement will provide an opportunity for negotiations.
Negotiations can lead to tariff reductions
Kukies stressed that the German government seeks “partnership-kind negotiations” with the Trump administration, and the results could actually be a net reduction in tariffs.
He said in talks to reach an agreement to form a new German government, the two likely coalition partners, SPD and CDU/CSU, are proposing a free trade area between the European Union and the United States.
“That takes care of all the asymmetries, because we will reduce all tariffs to zero, and it would be no discrimination by definition,” Kukies said, calling zero tariffs “the best competitiveness enhancing measure for both sides.”
“The easiest way to ensure balance and fairness is for everyone to go to zero. Then we have free trade, efficiency, economies of scale. We can think about standardization, mutual market access and many other things,” the minister said.
In Kukies’ view, this would be a much better way to actually reduce tariffs symmetrically on both sides, rather than competing on who has higher tariffs in which areas.
‘The key is to send a signal’ to US
Asked if negotiations for a free-trade agreement with the Trump administration are realistic, Kukies said it is more of “an aspirational goal,” as Washington is now moving toward higher tariffs rather than lower.
He said the key is to send a signal to Washington that Germany is willing to discuss all options, including reducing tariffs to zero.
“Of course, if it’s something in between, that’s also good, as long as it’s a fair and balanced solution that decreases the tariffs rather than increases them,” the minister added.
Last week, Trump announced that the United States would impose a new 25% tariff on cars and light trucks imported into the United States. He said the tariffs would be permanent and would go into effect on April 2.
Trump has a longstanding belief that the US is being treated unfairly in global trade.He argues that many countries impose higher tariffs on US goods than the United States does on theirs, creating an imbalance.
However, economists have pointed out that the US benefits from having large trade imbalances with the rest of the world, as the dollar is used in most trade, which offers major tailwinds to the US economy.
Edited by: Sean Sinico
