Art of steel: German Chancellor Angela Merkel, surrounded by other Group of Seven leaders, stares down US President Donald Trump at the G-7 summit in La Malbaie, Canada.The photograph by German government spokesman Steffen Seibert went viral on Monday. Picture: REUTERS
Art of steel: German Chancellor Angela Merkel, surrounded by other Group of Seven leaders, stares down US President Donald Trump at the G-7 summit in La Malbaie, Canada.The photograph by German government spokesman Steffen Seibert went viral on Monday. Picture: REUTERS

Berlin — Germany sees no immediate solution to the trade dispute between the US and other major economies but remains open to talks "among friends", Economy Minister Peter Altmaier said on Monday, seeking to head off a full-blown global trade war.

US President Donald Trump backed out of a joint communique agreed by Group of Seven leaders in Canada at the weekend that mentioned the need for "free, fair and mutually beneficial trade" and the importance of fighting protectionism.

Trump, who has imposed import tariffs on metals, is furious about the US’s large trade deficit with key allies.

"Fair trade is now to be called fool trade if it is not reciprocal," he tweeted on Monday.

Germany's minister for economic affairs and energy Peter Altmaier. REUTERS/Axel Schmidt.
Germany's minister for economic affairs and energy Peter Altmaier. REUTERS/Axel Schmidt.

As Europe’s biggest exporter to the US and with more than 1-million German jobs at stake, Germany is desperate to avoid an EU trade war with the US.

"I believe a win-win situation is still possible," Economy Minister Peter Altmaier, one of Chancellor Angela Merkel’s closest lieutenants, told broadcaster Deutschlandfunk.

"At the moment, however, it seems that no solution is in sight, at least not in the short term... We have not made any progress in the last few days, but rather, as we saw with the rejection of the summit declaration, we have gone backwards."

Merkel said on Sunday the EU would implement counter-measures against US tariffs and described Trump’s rejection of the G-7 communique as "sobering and a bit depressing".

Investors are fearful of a tit-for-tat trade war, though markets were relatively calm on Monday after an early wobble.

"The American withdrawal from the G-7 communique has increased the risk of a real trade war," ING wrote in a research note.

In 2017 German exports to the US reached €112bn, more than twice the next biggest EU country, Britain, Eurostat statistics office data shows.

Particularly concerning for Germany, a major car exporter to the US, is Trump’s weekend tweet that Washington is looking at tariffs on vehicles.

Altmaier said Europe must act "in a united manner", defend open markets, and stick to its convictions. Fractures in the European position would play into Trump’s hands, he said.

"We are ready to talk about trade imbalances. But we think it has to be done among friends and partners and not in mutual confrontation," Altmaier said.

"The American economy is dependent in many areas on the import of European goods. As tariffs increase, so does the cost of production in the US."

The European Commission, which co-ordinates trade policy for the 28-member EU, aims to target €2.8bn worth of US imports, including bourbon and jeans, with additional 25% duties, from early July.

It already has broad backing from EU member states, but still needs to consult with them in the next couple of weeks.

European Commission president Jean-Claude Juncker, while questioning whether the US was truly an ally, said the bloc did not want to stop talking with Washington.

"We do not want to cut off discussions and further talks will of course need to address the automobile sector," he said.

Reuters