Christian Lindner, German Finance Minister, during a meeting with Janet Yellen, US Treasury Secretary (not pictured), at the annual meeting of the IMF and World Bank in Washington, DC, USA, on Thursday, October 24, 2024.
Ting Shen | Bloomberg | Getty Images
German Finance Minister Christian Lindner warned on Friday that there could be retaliation if the United States started a trade war with the European Union.
“In trade controversies, there are never winners, only losers,” Lindner told CNBC's Karen Tso on the sidelines of the International Monetary Fund's annual meeting in Washington, DC
What US trade policy might look like if Donald Trump were elected president is a central question, said Lindner. “In this case, we need diplomatic efforts to convince everyone who enters the White House that it is not in the best interests of the United States to have a trade conflict with them.” [the] European Union. “We would have to think about retaliation,” he said. Lindner belongs to the pro-business Free Democratic Party, which is currently in coalition with Chancellor Olaf Scholz's Social Democratic Party.
The US's trade problem lies more with China than with the EU, Lindner said, adding that the EU “must not become a negative side effect” of the controversy between the US and China.
Trump has floated the idea that if elected, blanket tariffs of 10 to 20 percent could be imposed on almost all imports, regardless of where they come from.
If the US were to introduce such a 20 percent tariff, the gross domestic product of the EU and Germany would fall in the coming years, Reuters reported on Thursday, citing a study by the German economic institute IW. Trade is one of the main pillars of the German economy, suggesting increased tensions, uncertainty and tariffs would hit the country harder than others.
At the beginning of the month, the German statistics office Destatis said that the importance of the USA as a trading partner for Germany had increased. Since 2021, the USA has been Germany's second most important trading partner behind China, the agency said, but in the first half of 2024 foreign trade turnover with the USA was higher than with China. According to Destatis, around 9.9% of German exports went to the USA in 2023.
Trade tensions between the US and China and the EU and China have increased over the year. Both the US and EU have imposed higher tariffs on some goods imported from China, citing unfair trade practices.
China, in turn, has also announced higher temporary tariffs on some imports from the EU. While the settlement measures are ongoing, several investigations and investigations into mutual competition, subsidies and other practices are also currently underway.
After the EU voted to impose tariffs on electric vehicles made in China, German politician Lindner urged the union not to start a trade war. Germany had previously spoken out against higher tariffs and expressed concerns about what impact they could have on the country's struggling automakers.
Earlier this week, IMF Deputy Managing Director Gita Gopinath told CNBC that an escalation in trade and tariff tensions between the U.S. and China would be “costly for everyone.”
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