The trust between Europe and the U.S. is not yet broken despite President Donald Trump’s aggressive tariff policies, Joerg Kukies, acting German finance minister, told CNBC Thursday.
“For trust to be broken, a lot more would have to happen because the transatlantic partnership has been built over so many decades that we will not get carried away by the statement of tariffs,” he told CNBC’s Carolin Roth on the sidelines of the IMF World Bank Spring Meetings.
Kukies added that during a previous visit to Washington, soon after the 25% tariffs on all cars imported to the U.S. was announced, there did appear to be interest in coming to an agreement.
Europe and the U.S. have different interests and both parties need to understand one another’s viewpoints, he said. “But this is not the first time ever that the United States and Europe are negotiating over tariffs, so I don’t think we’re anywhere near a crisis moment.”
Kukies struck a positive tone when referring to talks, saying “everything is going in negotiation mode” with the bloc “optimistic” that it can resolve the differences.
A zero-for-zero tariff agreement would be his preferred outcome, Kukies stated. This aligns with what European Commission President Ursula von der Leyen has advocated for.
However, Trump has already rejected a proposal from the European Union for a deal which would see zero percent duties on industrial goods imported from the U.S. as well as on imports from the EU.
Germany is currently subject to 10% tariffs — the temporarily reduced rate announced by Trump after the initially imposed 20% duties.
The country’s struggling economy is heavily reliant on trade, as the U.S. serves as its most important trading partner. Tariff turmoil led by Trump is therefore expected to hit Germany especially hard.
Earlier on Thursday, the German government revised its forecast for the country’s economic growth lower, saying it was now expecting stagnation in 2025. This compares to January’s estimate of 0.3% growth.
Acting economy minister Robert Habeck in a press conference cited U.S. President Donald Trump’s trade policies and their impact on the German economy as the main reason for the downward revision.
The IMF in its latest World Economic Outlook, which was published earlier this week, also cut its expectations for the German economy with the body now projecting a 0.2% contraction.
Germany’s economy has been struggling for some time, contracting in both 2023 and 2024 on an annual basis. The country has however avoided a technical recession, which is characterized by two consecutive quarters of contraction. The latest gross domestic product data is slated to be released next week.
There could however also be some positives on the horizon after a major fiscal package, which could lead to a major investment boost, was enshrined in Germany’s constitution earlier this year. It included changes to the long-standing debt brake rule that are set to enable higher defense spending, as well as a 500 billion euro ($569 billion) infrastructure investment fund.
Germany’s debt brake limits how much debt the government can take on and dictates the size of the federal government’s structural budget deficit
(Source)