Germany warns U.S. against imposing tariffs on EU goods

The German government has warned U.S. president Donald Trump against starting a trade war with Europe, saying that if the country imposes tariffs, the EU is prepared to retaliate with its own levies. "We Europeans are prepared for counter-tariffs," said economy minister Robert Habeck in the Kölner Stadt-Anzeiger, adding that "we can't let ourselves be pushed around". Habeck and Friedrich Merz, chancellor candidate for the conservative Christian Democratic Union (CDU), told German media in separate interviews that U.S. companies and consumers will ultimately pay the price for tariffs because they make products more expensive and fuel inflation.  

While German politicians echoed their EU counterparts in saying that free markets and adhering to international trade rules are crucial for strong, sustainable economic growth, finance minister Jörg Kukies called for cool heads at a meeting with German business representatives in Riyadh, reported Tagesspiegel. "We should not react in panic to the initial decisions but rather see them as the start to negotiations and not an end," said Kukies, adding that the German government will try to maintain a constructive dialogue.  

The flurry of reactions came after Trump announced 25 percent tariffs on goods from Canada and Mexico and 10 percent on imports from China. When asked if he was going to impose tariffs on the EU, he said "absolutely". During his first term, Trump also slapped tariffs on the EU, which retaliated with its own tariffs on American goods. 

The U.S. was the largest partner for EU exports of goods in 2023, according to Eurostat. Of all the EU member states, Germany was the largest exporter to the U.S. At the same time, the German economy has been stagnating and "not only struggling with persistent economic headwinds, but also with structural problems", the Bundesbank recently said.

Economy minister Habeck warned of the dangers for Germany of an EU-U.S. trade war in the Kölner Stadt-Anzeiger. "Trump is primarily attacking the German economy, German companies." Even U.S. tariffs in Mexico are hitting German companies as businesses have invested some 45 billion dollars in sectors such as the car industry, pharmaceuticals and logistics there, said the German-Mexican Chamber of Commerce.  

Tariffs could hit cars – a major German export – particularly hard. The sector is already struggling amid possible mass layoffs and plant closures, as well as collapsing profits, sparking concerns about its long-term viability. Famous for its combustion engines, the German car sector has struggled to master the transition to electrification, while domestic transport sector emissions remain stubbornly high.

Experts have said that Germany must push forward with decarbonisation efforts across the economy despite tight finances and looming trade wars, or put long-term competitiveness at risk. Similarly, the EU has struggled to maintain competitiveness in the face of China's ascent and an innovation gap with the U.S. Against the backdrop of Trump's tariff threats, the EU has published a "competitiveness compass" for reigniting the EU economy – essentially a policy guideline for the new legislative period of the European Union.