Christian Lindner, German Finance Minister, meets with Janet Yellen, US Treasury Secretary, at the annual meetings of the International Monetary Fund and World Bank in Washington, DC, US, on Thursday, October 24, 2024.
Ting Shen | Bloomberg | Getty Images
German Finance Minister Christian Lindner warned on Friday that if the United States starts a trade war with the European Union, there could be retaliation.
“The trade debate never sees winners, only losers,” Lindner told CNBC's Karen Tsu on the sidelines of the International Monetary Fund's annual meeting in Washington, D.C.
Lindner suggested that what US trade policy could look like if Donald Trump is elected president is a key issue. He said, “In this case, we need diplomatic efforts to convince whoever enters the White House that it is not in the interest of the United States to have a trade conflict with the European Union. We will have to think about revenge.” Lindner belongs to the pro-business Free Democratic Party, which is currently forming a coalition with Chancellor Olaf Scholz's Social Democratic Party.
Lindner said the United States' trade problem lies with China, not the European Union, adding that the European Union “should not become a negative side effect” of the debate between the United States and China.
Trump has floated the idea that, if elected, blanket tariffs of 10% to 20% could be imposed on almost all imports, regardless of their source.
If the United States implements this 20% tariff, the GDP of the European Union and Germany will decline in the coming years, Reuters reported on Thursday, citing a study by the German economic institute IW. Trade is one of the main pillars of the German economy, which suggests that rising tensions, uncertainty and tariffs will hurt the country the most.
Earlier this month, the German statistics office, Destatis, said the importance of the United States as a trading partner for Germany was growing. The agency said that since 2021, the United States has been Germany's second most important trading partner after China, but in the first half of 2024, the volume of foreign trade with the United States was higher than that with China. In 2023, about 9.9% of German exports will go to the United States, according to Destatis.
Trade tensions between the United States and China, and the European Union and China, rose throughout the year. Both the United States and the European Union have imposed higher tariffs on some goods imported from China, citing unfair trade practices.
China, in turn, announced higher temporary tariffs on some imports from the European Union. Numerous investigations and probes into each other's competition, support and other practices are also underway as cross-actions continue.
After the European Union voted in favor of imposing tariffs on Chinese-made electric cars, Germany's Lindner urged the bloc not to start a trade war. Germany has previously called for no higher duties, raising concerns about what they could mean for the country's struggling carmakers.
Earlier in the week, Gita Gopinath, deputy managing director of the International Monetary Fund, told CNBC that escalating trade tensions and tariffs between the US and China would be “costly for everyone.”
