Despite President Donald Trump’s aggressive tariff policy, trust between Europe and the United States has yet to break, German acting finance minister Jog Kukeys told CNBC on Thursday.
“To break trust, there’s a lot more to happen as the transatlantic partnership has been built for decades and we don’t get hooked on tariff statements,” he told CNBC’s Carolyn Ross to a bystander at the IMF World Bank spring meeting.
Kukeys added that during his previous visit to Washington, he appears interested in reaching an agreement shortly after the 25% tariff on all cars imported into the US was announced.
He said Europe and the US have different interests, and the parties need to understand each other’s perspectives. “But this is not the first time the US and Europe have negotiated tariffs, so we don’t think we’re near a moment of crisis.”
Kukies puts a positive tone when referring to consultations, saying, “Everything is going in negotiation mode,” who is “optimistic” to resolve the differences.
A zero-to-zero tariff contract would have a positive outcome of him, Kukeys said. This is consistent with what was proposed by President Ursula von der Leyen of the European Commission.
However, Trump has already rejected proposals from the European Union for contracts that consider a zero percent obligation for industrial products imported from the US and imports from the EU.
Currently, Germany is subject to 10% tariffs. This is a temporarily reduced fee announced by Trump after initially imposing a 20% position.
As the US serves as a partner of its most important trading partner, the country’s struggled economy is heavily dependent on trade. Therefore, the Trump-led tariff disruption is expected to hit Germany particularly hard.
Earlier on Thursday, the German government revised its economic growth forecast, saying it was expected to stagnate in 2025. This is compared to the January growth rate of 0.3%.
At a press conference, representative minister Robert Habeck cited President Donald Trump’s trade policy and impact on the German economy as the main reasons for the downward revision.
The latest global economic outlook released earlier this week, the IMF has now projected a contraction of 0.2%, cutting expectations for the German economy.
Germany’s economy has been struggling for some time, with contracts annually for both 2023 and 2024. However, the country avoided a technical recession. This is characterized by two consecutive contractions. The latest GDP data is expected to be released next week.
However, there may be some positives on the horizon after a major fiscal package that could boost key investments was engraved in Germany’s constitution earlier this year. This included a long-standing debt braking rule change set to allow for higher defence spending, and an EUR 500 billion ($569 billion) infrastructure investment fund.
Germany’s debt brake limits how much debt the government can take on and determines the size of the federal government’s structural fiscal deficit.
