The United States must stick to international agreements under the presidency of Donald Trump, German Finance Minister Wolfgang Schaeuble said on Friday, adding he did not expect a major trade war despite Trump’s attack on German car makers.
Trump, taking office on Friday, has vowed to make sweeping changes to U.S. trade policy and economists see his protectionism as the biggest risk to U.S. growth.
“The United States also signed international agreements,” Schaeuble told magazine Der Spiegel. “I don’t think a big trade war will break out tomorrow, but we will naturally insist that agreements are upheld.”
Schaeuble told the World Economic Forum in Davos, Switzerland: “I am quite optimistic that even the U.S. and the rest of the world as a whole will not (abandon) the defence of free trade.”
He said the German economy would feel the effects of any protectionist backlash emanating from Washington, but Germany would be somewhat insulated since its growth was currently driven by domestic demand.
Nearly 61 percent of Germans fear relations between Germany and the United States will suffer under Trump, according to a poll conducted by the Civey institute for the Tagesspiegel newspaper. Only 5 percent expect a positive change.
Trump criticised German auto makers this week for failing to produce more cars in the United States and said he would impose a tax of 35 percent on vehicle imports.
U.S. companies employ more than 600,000 people in Germany, the United States’ biggest European trading partner, and German firms employ roughly the same number in the United States.
Schaeuble said he wished Trump luck if he wanted to tell Americans which cars to buy. “That’s not my vision of America and I don’t think it’s his either,” he said.
He also recommended not taking Trump’s practice of tweeting plans for policy changes too seriously: “One shouldn’t confuse Trump’s form of communication with statements of government policy.”
Marcel Fratzscher, head of the DIW economic institute, said protectionism would not bring jobs back to the United States.
“It’s an alarming day for the European economy because the presidency of Donald Trump has caused uncertainty,” Fratzscher told Reuters TV. He urged European officials to remain calm and avoid escalating the situation with threats and counter-threats.
President of the American Chamber of Commerce in Germany Bernhard Mattes said: “Protectionist measures like tariffs and/or the cancellation of international trade agreements have no place in a globalised world.”
(Reporting by Andrea Shalal; Editing by Janet Lawrence