- - Thursday, March 16, 2017

BERLIN, Germany — Forget about the Twitter tirades, the yawning differences in leadership style and the not-so-subtle jabs that started flying across the Atlantic even before President Trump’s inauguration in January.

When staid, practical-minded German Chancellor Angela Merkel meets with the stylistically brash and bold Mr. Trump for the first time on Friday, she’ll be looking to talk to the American president in the role he first became famous for: as a businessman.

And to bolster her case against a looming trade war and protectionist measures that would take a toll on Germany’s exporting prowess, she’s bringing some bigwigs of German industry along: Joe Kaeser and Harald Kreuger, the CEOs of Siemens and BMW, respectively.

While it’s not unheard of for Ms. Merkel to travel to Washington with heavy-hitting business titans in tow, analysts said the unpredictable signals and statements on trade coming from the Trump administration have lent this delegation a sense of urgency as it visits one of Germany’s most valuable trade partners — and one with which Berlin annually runs up large trade surpluses.

“Everything we took for granted under previous U.S. presidents is in question here,” said Claudia Schmucker, a senior policy analyst at the German Council on Foreign Relations in Berlin.

“Trump has criticized the [World Trade Organization], and he’s talked about import duties on German carmakers — and that is all so far away from everything we have heard from a U.S. president before.”

Talk of concluding negotiations on the Transatlantic Trade and Investment Partnership (TTIP) — a U.S.-EU free trade pact that Ms. Merkel promoted as far back as 2007 — has been replaced with tweets criticizing individual firms and the free movement of goods across the Atlantic.

German carmakers in particular have been a favorite target of Mr. Trump, who has frequently taken to social media to accuse BMW and others with exploiting what he says is an unfair trade relationship with the U.S. — one that led to a $65 billion trade deficit with Germany in 2016.

He even threatened to retaliate against BMW if the Bavarian auto giant moved ahead with plans to open up a plant in Mexico rather than the U.S.

“I would tell BMW that if you are building a factory in Mexico and plan to sell cars to the USA, without a 35 percent tax, then you can forget that,” Mr. Trump said in an interview with Bild, Germany’s biggest daily newspaper, shortly before his inauguration.

And Peter Navarro, President Trump’s main trade adviser, has even gone as far as to say the trade deficit with countries like Germany was a risk to U.S. national security, and that Germany was using the EU and the undervalued euro as a way to give its exporters an unfair edge.

These swipes at German industry have not gone unnoticed on the other side of the Atlantic.

“German industry is terrified of new tariffs from the USA,” wrote the Ifo Institute for Economic Research March 15, a Munich-based economic think tank, following a survey of 2,700 German firms on their expectations of Mr. Trump’s trade policies.

Nearly half of the firms polled said they were expecting completely new tariffs under a Trump presidency, said Ifo. Roughly 10 percent said they would consider manufacturing more in the U.S. as a result of changes to trade policies.


One of Ms. Merkel’s aims in Washington is to help de-escalate this situation and expound on the value of Europe’s trade relations with the U.S. — worth $1.1 trillion in 2014, according to the Office of the U.S. Trade Representative, the latest data it had compiled.

“The United States of America is a key trading partner for Germany and for the entire European Union,” Ms. Merkel said in a speech to German business leaders in Munich this week, noting that the U.S. is Germany’s third-largest trading partner. “Trade is advantageous for both sides, and I’m looking forward to the chance to speak to the newly elected American president about these issues.”

Analysts said Ms. Merkel and her associates want to help the present administration better grasp the role Germany plays in the U.S. economy.

Merkel is traveling with these businessmen to make sure the president understands that the deep connection between the U.S. and European economies, and the U.S. and German economies in particular, means that we do not have a trade relationship,” said Peter Chase, a senior fellow at the German Marshall Fund in Brussels. “Rather, we have an investment-based relationship.”

That investment-based relationship between the U.S. and Europe is unique in terms of familiarity and size, said Mr. Chase. European companies invested over $2 trillion in the American economy in 2014 alone, according to estimates from the American Chamber of Commerce to the European Union.

German direct investment in the United States in 2015 alone was worth $255 billion, according to the State Department.

Moreover, German firms employ over 600,000 Americans in the U.S., while BMW is the largest exporter of cars from the United States by value. Its biggest factory in the world isn’t even in Munich; it’s located in Spartanburg, South Carolina.

“But a lot of these facts haven’t percolated through,” he added. “And that’s a problem: That sort of foreign investment is significant for manufacturing employment as a whole in the United States. A lot of foreign-owned firms are very good U.S. corporate citizens.”

That’s also why statements from the Trump administration — from calls for bilateral trade agreements and a border-adjustment tax to accusations that Germany is manipulating the euro to boost its exports — have left many firms here exasperated.

“German industry made its thinking pretty clear earlier this week in sending a wish list along with the chancellor,” said Laura von Daniels, a political economist at the German Institute for International and Security Affairs in Berlin. “And high up there on that list is that anything to do with increased tariffs on imports or the border-adjustment tax should be avoided because it hurts German investors’ interests.”

Instead, analysts say firms are hoping that Ms. Merkel — who it was revealed plans to travel to Moscow in May — finds a way to open a constructive dialogue with the new administration.

“That is the main point, that the dialogue is kept up and there is less talk about retaliation,” said Ms. von Daniels. “Let’s bring it back to the negotiating table instead.”

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