Germany is among the countries that have much to lose in case of an escalation of the current trade dispute with the U.S. Therefore, despite President Donald Trump’s administration imposing tariffs on steel and aluminium from the EU, Germany favours continuing talks and seeking compromise. Germany’s caution is beneficial: it reduces the risk of a political crisis in transatlantic relations, protects economic interests, and creates an opportunity to block the construction of the Russia-backed Nord Stream 2 gas pipeline.

Active Lobbying Required

European firms maintain their dominant foreign investment position in the United States. Of total U.S. inflows of $385 billion in 2016, 72% were from Europe, with inflows from Europe totaling an estimated $277 billion for the year. That reflects the strategy of European firms to be “inside” the world’s largest and most dynamic market.  

Ranking of Top 20 States by jobs supported directly by European investment (Thousands of employees) (2014)

1. Acknowledgement that free, fair and mutually beneficial trade and investment, while creating reciprocal benefits are key engines for growth and job creation.
2. Underlining the crucial role of a rules-based international trading system and fight against protectionism.
3. Bilateral, regional and plurilateral agreements must be open, transparent, inclusive and WTO-consistent, and they should complement the multilateral trade agreements.
4. Commitment to modernize the WTO to make it more fair as soon as possible.

U.S. exporters and investors face persistent barriers to entering, maintaining, or expanding their presence in certain sectors of the EU market. Some of the most significant barriers have endured despite repeated efforts at resolution through bilateral consultations or WTO dispute settlement.

TECHNICAL BARRIERS TO TRADE / SANITARY AND PHYTOSANITARY BARRIERS

Technical Barriers to Trade

According to IMF data from 2016, the US and EU are each other’s top export market and second source of imports after China. Both the European Union and United States generally offer reciprocally open access to each other's exports. American exports to Europe are subject to duties averaging 3.0 percent close to the 2.4 percent average the United States imposes on European goods and services. According to the World Trade Organization, however, in 2016 the US imposed minimum import duties of 3.5 percent while the equivalent rate in the European Union was 5.2 percent.

The EU estimates the U.S. tariffs on steel and aluminum will cost the bloc around € 2.8 billion and its countermeasures from July 2018 aim to penalize imports from the United States to the same value, while also generating political pressure on Trump at home from industries whose export will be hit.

Amid escalating tensions between the U.S. and Europe over trade and foreign policy, President Trump has nominated Mr. Gordon D. Sondland to fill the long-vacant post of U.S. Ambassador to the European Union. The EU job has been vacant since Anthony L. Gardner resigned in January 2017.

1. The U.S. market represents the first destination market for European exports of cars. This trade totaled € 38 billion in 2016. The value of German  car exports to the US amounted to € 22 billion in 2016.
2. Of the 1.3 million German cars sold in the US, more than 800,000 were made on American soil. German carmakers — including BMW and Daimler  made some 854,000 vehicles in the U.S. in 2016,  That marks a four-fold increase on the 214,000 produced in the country in 2009

The tariffs on steel and aluminum further undermine European confidence and trust in the United States, and reinforce already negative views about Donald Trump. The row over tariffs will make it considerably harder for Washington and European capitals to cooperate on other key issues or when new crises arises.  

The Trump tariffs undermine the international institutional order which the United States once helped create. Trump has decided to act alone and weaken the rules-based economic system that Washington should be revitalizing.