Merkel Ally Urges EU-U.S. Cooperation to Tackle `Unfair' China

(Bloomberg) -- Europe should use a reprieve with President Donald Trump in a simmering trade conflict to convince the U.S. to team up against China’s potentially “unfair” trade practices, according to a German government official.

Juergen Hardt, who oversees transatlantic coordination for Chancellor Angela Merkel’s Christian Democrat-led coalition, said the EU’s exemption from U.S. steel and aluminum levies will win “time to talk” about the risks presented by a more assertive China in global commerce.

“One of our proposals to the U.S. side is that we should go into talks on how we can face probably unfair trade practices from China,” Hardt said in an interview with Bloomberg Television in Berlin on Friday. “If you look at our economies -- the U.S. plus the European Union’s economy -- it’s double and therefore also our leverage is double.”

German Economy Minister Peter Altmaier, a close Merkel confidante who held talks this week with U.S. Commerce Secretary Wilbur Ross, expressed relief that diplomatic overtures made an impact, defusing the risk of a tit-for-tat trade conflict. He said the German government stood by its criticism of Trump’s “unilateral” measures.

“We confronted the question of whether there would be a trade war between the U.S. and Europe,” Altmaier told reporters in the German capital. He said he made no counter-offers to the U.S. to secure an exemption on tariffs.

The Trump administration opted to sidestep a trade conflict with the EU for now, while announcing levies worth $50 billion on Chinese imports. Expressing the free-trade stance of Merkel’s new government, Hardt said it was crucial to prevent a “race to the top” on tariffs -- and that a trade conflict would translate into a “lose-lose competition.”

‘Sovereign Decision’

The EU has an opportunity to open a “new dialogue” with the U.S. on trade, even as Trump and his officials have singled out Germany’s yawning surplus as unfair to the U.S. economy and its workers. Hardt, who held talks with U.S. officials in Washington two weeks ago, said there is “strong support” among U.S. lawmakers for a multilateral trade approach.

On China, Hardt expressed optimism that Beijing would eventually back the global trade regime, “because they are exporters, and strong exporters are in favor of having easy trade relations and no trade wars.”

Hardt, who is also a CDU member of the lower house of parliament, questioned Germany’s responsibility for its trade deficit, saying the U.S. could invest more in infrastructure and education. German high-end goods such as luxury cars aren’t in price competition with U.S. products, he added.

“It’s a free and sovereign decision of every customer in the U.S. to buy a BMW and Mercedes and not a Chevrolet or Cadillac,” he said.

©2018 Bloomberg L.P.