Merz says trade deal will cause ‘considerable damage’ to German economy
German chancellor Friedrich Merz said the trade deal struck by the EU with the US will hurt America and cause “considerable damage” to the Eurozone’s largest economy, as he battled criticism from business and political opponents.
“The German economy will suffer considerable damage as a result of these tariffs,” he said on Monday. “But I’m pretty sure it won’t be limited to Germany alone and to Europe alone. We will also see the consequences of this trade policy in America — not only will there be a higher inflation rate, but it will also affect transatlantic trade overall.”
Merz added that he did not “expect more than this outcome” and that it was the “best result achievable in a given situation”.
Euro on course for second-biggest fall this year
The euro’s fall accelerated on Monday, putting the currency on course for its second-biggest fall this year, as investors bet that the EU-US trade deal would hurt the European economy.
The single currency was down as much as 1.3 per cent against the dollar at $1.16 in afternoon trading, and weakened by as much as 0.7 per cent against the pound.
Under the deal agreed on Sunday, most EU exports to the US would face a 15 per cent tariff while Brussels failed to secure any concessions on trade from Washington.
European stocks also relinquished earlier gains as initial relief that a deal had been struck was replaced by concern over its impact on the Eurozone economy. Germany’s Dax ended the day 1 per cent lower.
German industry chief blames poor EU competitiveness for weak US trade deal
A top executive at Germany’s largest industry trade organisation has blamed the EU’s poor competitiveness as the main reason for failing to negotiate a better trade deal with the US.
Wolfgang Niedermark, a member of the board of the BDI, said the deal offered some respite that should be used to improve the EU’s bargaining position for when the next trade dispute emerges with US President Donald Trump.
“The EU commission simply did not have a good negotiating position,” he told the FT.
Niedermark added: “When there are the next rounds and the next conflicts, I would like an EU that is stronger and can then also play to its strength.”