ASSESSMENTS

Trading a Battleground for Common Ground in Washington

Mar 13, 2017 | 08:16 GMT

As Berlin adjusts its approach toward its longtime partner across the pond, it will have to decide whether to defend the multilateral institutions that underpin its success, or adapt to a new reality in which Washington no longer supports them.

(Stratfor)

Forecast Bullets

Faced with growing U.S. protectionism, Germany will try to work with the new administration in Washington to defuse the tension mounting between them.
At the same time, Berlin will adjust its positions on some EU policies to preserve the single market that is so critical to its own economy's success.
Germany will seek out new destinations for its exports as well, spurring the European Union's free trade negotiations with emerging markets forward.

Since taking office on Jan. 20, U.S. President Donald Trump has put shrinking the U.S. trade deficit at the top of his economic agenda. After he doled out criticism to countries with which the United States holds the largest trade deficits and threatened to slap punitive tariffs on their exports, Washington's trade partners have scrambled to come up with strategies to address the new administration's concerns. Japanese Prime Minister Shinzo Abe has already sat down with Trump to defend his country's policies, and German Chancellor Angela Merkel isn't far behind. She will head to the United States on March 14 to meet with Trump for the first time, a day before German Finance Minister Wolfgang Schaeuble will hold talks with U.S. Treasury Secretary Steven Mnuchin in Germany. Because exports are the lifeblood of the German economy, the prospect of a trade war with the United States is a source of deep...

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