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“There is a sense of urgency” for the US and EU to strike a trade deal, Germany’s finance minister said Wednesday, because the uncertainty is “bad for everyone.”
Speaking at Semafor’s World Economy Summit, Jörg Kukies said that the global trade upheaval was forcing CEOs to delay their investment decisions and making customers procrastinate on buying goods.
When asked whether the White House’s negotiating position is weakening as markets slide, Kukies said waiting out President Donald Trump wasn’t a viable option. “The longer we wait for an agreement, the longer we let the uncertainty in both of our economies linger, and I just don’t see that as a positive,” he said.
While Kukies won’t be doing the negotiating — that job goes to Brussels, which will make a deal on behalf of the 27 countries in the EU — his comment offers insight into the sense of urgency some European leaders are feeling. His stance runs in contrast to that of a Polish official who a few weeks ago said that EU countries “want to give the US time to think about the whole situation as the US market lost 5 trillion within a few days.”
An expedited deal with the US could cushion the blow of new GDP data coming out of Germany next week, “which won’t be great,” Kukies said. The largest economy in Europe, Germany has been in a recession since 2022, facing the disruption of Russian energy supplies, labor shortages, and an industrial slump. It has been the worst-performing major economy globally for the past two years, and it is facing a potential third consecutive year of contraction.
Tariffs threaten the country’s recovery plan. The Trump administration’s 20% tariff on European goods and 25% levy on steel and aluminum would hit particularly hard in Germany, where car and car parts accounted for 17% of exports last year, mostly to the US. US and German supply chains are more intricate than the tariffs account for, evidenced by Kukies’ wife driving an “American car,” he said — a BMW made in South Carolina.
The EU prepared retaliatory measures but paused its plans on news the US government would hold the tariff increases for 90 days to negotiate.
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While trade with the US is up in the air, the US is still a creditworthy borrower, even with the recent turmoil in the bond market, Kukies said.
“I don’t have the impression there’s any reassessment of credit risk,” he said. “The United States is the global reserve currency and will probably remain so for a very long period of time.”
“Europe has to get its act together in terms of creating a capital markets union to create more depth and more liquidity in our own benchmark bonds,” Kukies added.
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