Merkel Warns Nobody Would Win Trade War Over Trump Metal Tariffs

(Bloomberg) -- German Chancellor Angela Merkel warned “nobody will win” a global trade conflict after U.S. President Donald Trump approved tariffs on foreign steel and aluminum.

With Germany in Trump’s sights for its trade surplus, Merkel signaled on Friday that her government will support European Union retaliation if necessary, though she prefers reviving talks on an EU-U.S. trade pact to lower tariffs and defuse the conflict.

“I don’t want to use martial language -- that doesn’t help us get any further,” Merkel told reporters in Munich after meeting the heads of leading German business groups. “It would ultimately be detrimental to everyone. No one would win such a competition.”

Trade conflict with the U.S. is the first big challenge of Merkel’s fourth term as she prepares for her re-inauguration on Wednesday. The U.S. was German manufacturers’ biggest export market in 2017 and the country with which Germany -- Europe’s largest economy -- has its biggest trade surplus.

‘Very Unfairly’

Deputy government spokesman Georg Streiter said earlier Friday that Germany views Trump’s tariffs as illegal. Merkel said the only way forward was to keep working for an EU trade agreement with the U.S. despite Trump’s protectionist moves.

“We’ll make very, very clear in our talks that that is our ultimate goal,” Merkel said.

Trump has singled out Germany, with its auto-heavy export economy, as taking advantage of its trade surplus with the U.S., saying during a meeting last year in Washington that the U.S. had been treated “very, very unfairly.”

Dieter Kempf, head of the Federation of German Industries, said the country’s business leaders agree with the chancellor. The trade spat could be resolved through World Trade Organization rules, he said alongside Merkel in Munich.

“We should keep calm,” Kempf said.

©2018 Bloomberg L.P.