Merkel warns of worldwide financial crisis

July 5, 2018

BERLIN — German Chancellor Angela Merkel raised the specter of a new global financial crisis as she warned of the potential fallout from a trade war with the U.S., saying tariffs on European cars would be “much more serious” than levies on steel and aluminum.

In an address to Germany’s lower house of parliament Wednesday, Merkel cited President Donald Trump’s threat of targeting U.S. imports of cars from Europe, which risk hitting Germany the hardest. She backed efforts by the European Union and U.S. negotiators to reach a deal this month.

“The international financial crisis, which ensured that we now act in the framework of the (Group of 20), would never have been resolved so quickly, despite the pain, if we hadn’t cooperated in a multilateral fashion in the spirit of comradeship,” Merkel said. “This has to happen.”

As the leader of Europe’s biggest economy, Merkel underscored her resolve to fight for the survival of post-World War II global institutions under attack by the Trump administration. At the same time, she renewed her counterattack against U.S. criticism of German exports by saying that the U.S. has a trade surplus with the EU if services are included.

“This is taking on the contours of a trade conflict. I don’t want to use words that go any further,” Merkel said in her speech. “It’s worth every effort to try to defuse this so that this conflict doesn’t become a war.”

In another development, German auto industry leaders are making the case to the Trump administration that a trade feud with the U.S. will cause irreparable damage to global business.

The chief executive officers of Volkswagen, Daimler and BMW met Wednesday with the U.S ambassador to Germany to discuss looming American duties on car imports from the European Union, according to people familiar with the matter.

Ambassador Richard Grenell told participants the U.S. government was seeking talks with the EU and German government with a proposal to reduce tariffs to zero, the Handelsblatt newspaper reported later. That contrasts with President Donald Trump’s proposal last month for a 20 percent levy on imported EU autos, part of his campaign seeking concessions that would lower the U.S. trade deficit. Carmakers and suppliers, including BMW, have previously said they would favor a bilateral removal of tariffs.