WASHINGTON (Reuters) - The rules-based order of multilateralism is increasingly under threat and leaders must uphold international cooperation, German Finance Minister Olaf Scholz said in Washington on Friday, calling on the United States to overcome trade differences with Europe.
U.S. President Donald Trump’s threat this week to impose tariffs on $11 billion (£8.4 billion) worth of European Union products, including commercial aircraft, has opened a new front in his global trade war and deepened a long-running transatlantic subsidy dispute surrounding Boeing and Airbus.
The U.S. government is also mulling higher import tariffs on European cars on grounds that they are posing a threat to the national security of the country. The move would particularly hurt the German economy and its huge car industry.
Speaking at a forum at the Peterson Institute on the sidelines of the spring meetings of the International Monetary Fund and World Bank, Scholz said both the United States and the EU had been advocates of open and fair trade for decades.
“I believe this is a matter of principle, it’s not just about achieving some short-term economic gain. It’s not about the art of the deal,” Scholz said in reference to the best-selling business advice book credited to Trump.
The priority for the EU and the United States should be to settle their current trade dispute and aim for a more open, extensive trading relationship, Scholz said.
The minister said the rise of China had shifted the global balance of power, but this should not lead to reactions that damage the global economy.
“Protectionism is not the answer. Neither should we consider side-deals that will undermine our international economic framework,” Scholz added.
Instead of imposing tariffs, Western countries should safeguard fair trade practices and fair competition in order to defend a level playing field, Scholz said.
Turning to Germany’s export strength, repeatedly criticized by Trump, Scholz said that Germany’s trade surplus was shrinking and that one should not get too caught up in discussions about current account balances. He pointed to strong increases in public investment, real wages and private consumption.
Reporting by Michael Nienaber; Editing by Andrea Ricci