BERLIN — The unstoppable force of President Trump’s rage against perceived bad trade deals may be set to encounter an immovable object: A united front by Germany and China.
Trump and his emissaries have singled out the massive trade surpluses of Germany and China as evidence of unfair practices. Trump has personally thrown shade on German giant BMW, raising the specter of 35 percent tariffs and a nasty trade war.
So it was fascinating to see Chancellor Angela Merkel take an important call just hours before leaving for her Friday meeting with Trump at the White House. The caller: Chinese President Xi Jinping.
According to the Germans, the two leaders "reaffirmed that they will work together for free trade and open markets."
The call was ostensibly tied to the G-20 leaders summit in Hamburg this July, when Merkel is anxious to get all nations — including the United States — to reaffirm their commitments to free trade. But the timing of the conversation, immediately before her first meeting with Trump, could easily be construed as a message: Take us on at your own risk.
The Germans and the Chinese have already suggested they would be willing to fight back if Trump starts a rumble over trade.
On Friday, German economy minister Brigitte Zypries, in an interview with German radio, raised the possibility of legal action at the World Trade Organization should Trump follow through on his trade threats. Yet a coordinated response by Germany and China to any U.S. moves could prove particularly thorny for Trump’s trade strategy.
Together, Germany and China are a trading force to be reckoned with. Germany is one of the few nations in the west that has seemed to crack the code to a mutually beneficial trading relationship with China. In 2016, China became Germany's largest trading partner for the first time, overtaking the United States, which slipped to third place behind France.
It suggests how Germany will counter the U.S. accusations of unfair trade. Germans have built a dynamic manufacturing base including small- and medium-sized exporters who specialize in highly sophisticated machinery and components. Even the Chinese not only want, but also need, to buy them.
Seeking to tone down the recent rhetoric, Treasury Secretary Steven Mnuchin, speaking at a news conference with German Finance Minister Wolfgang Schäuble on Thursday, said that the Trump administration is not itching for a trade war. But, ahead of a meeting with G-20 finance ministers in Germany, he also insisted the time had come to rethink trading relationships.
“The president does believe in free trade but he wants free and fair trade,” Mnuchin said.
The United States is indeed facing a challenging trade deficit that jumped to a five-year high in January. And Peter Navarro, a top Trump trade adviser, has argued that Germany’s massive surplus of about $50 billion with the United States is a big part of the problem.
There’s no doubt that German exports have benefited front the weaker euro. But the driving factor, the Germans have argued, is that they are simply building better things
As for trying to compel the Germans to buy more U.S. imports? Good luck with that.
Germany is a nation of notoriously frugal consumers in a country where the word for debt and guilt are nearly the same. They brag not about buying flashy new flat screen TVs, but about how long they’ve had their old ones. It is still quite common to find shops in Berlin that refuse to accept credit cards.
Germany has no interest in a trade war with the United States and Merkel will labor hard to prevent one.
But German officials are already gazing east should one come to pass.
“If U.S. protectionism should lead to new chances opening up for Europe in the whole of Asia, we should seize the opportunity,” German Foreign Minister Sigmar Gabriel recently told the German daily Handelsblatt.
Stephanie Kirchner contributed to this report.