Germany says protectionism is 'wrong path' for US, warns of pain on both sides of the Atlantic

Crude steel is melted in the steel plant of German corporation ThyssenKrupp in Duisburg, Germany, April 7, 2017
Crude steel is melted in the steel plant of German corporation ThyssenKrupp in Duisburg, Germany, April 7, 2017PHOTO: EPA-EFE

FRANKFURT AM MAIN (AFP) - The German government warned on Monday (March 5) that a transatlantic trade war would harm both Europe and the US, urging Washington not to take a "wrong path" after a weekend of aggressive rhetoric.

"A trade war would not be in German, European or American interests," Chancellor Angela Merkel's spokesman Steffen Seibert told reporters in Berlin after President Donald Trump at the weekend threatened to impose tariffs on car imports from the European Union.

"Closing oneself off and protectionism are the wrong path," Mr Seibert said.

"Such measures would inflict pain on international trade flows and our industry, but above all hurt workers and consumers on both sides of the Atlantic."

French President Emmanuel Macron said on Monday that the European Union must “react quickly” to US plans for tariffs of steel and aluminium imports.

“I believe it is important for the EU to react quickly, within the framework of the WTO and in a balanced manner,” Mr Macron said at a press conference.

“It’s clear that these (tariffs) would go against WTO rules,” he added.

Last week, Brussels raised the spectre of a tit-for-tat trade war with the US, saying it would slap a border tax on items like motorcycles, orange juice and jeans if Mr Trump went ahead with a promised tariff on steel and aluminium imports into the US.

"We will not sit idly when European industry and jobs are threatened," European Commission chief Jean-Claude Juncker said.

The EU's response matches similar moves during a 2003 "steel war" unleashed by Mr George W. Bush's administration - which prompted the US to back down before the EU carried out its threat.

This time, if the EU implements the plans, "we will simply apply a tax on their cars which freely pour into the US," Mr Trump tweeted on Saturday.

That new threat followed a declaration by the President on Friday that "trade wars are good, and easy to win" in response to the initial uproar at his plans for a metals tariff.

Along with close partner France, other EU capitals and the Commission, Berlin will "watch very closely what the US government implements this week and then evaluate the correct reaction", Mr Seibert said.

"We will defend open markets, free markets," he added.

The automobile industry is Germany's largest sector, employing roughly 800,000 people across the country and many thousands more around the world.

Nevertheless, German vehicles account for just 7.9 per cent of the American auto market according to the VDA industry association.

As well as exporting to the region, German car-makers also manufacture many of their vehicles for sale in North America on US soil, amounting to some 803,000 last year.

BMW's massive Spartanburg plant in South Carolina alone employs 10,000 workers producing around 1,400 vehicles per day.