Germany sees ‘most difficult part’ in EU-US trade talks ahead

US President Donald Trump may threaten tariffs of up to 25 percent on imported autos and auto parts, a major export of European economies, by designating the imports a national security threat. (AFP)
Updated 19 February 2019
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Germany sees ‘most difficult part’ in EU-US trade talks ahead

  • ‘For some weeks and months now, we’re observing with concern that the US is tightening its trade policies, that tensions are increasing’
  • ‘The impact can already be seen in the world economy, global growth has slowed’

BERLIN: The most difficult part in trade negotiations between Europe and the United States is starting now and talks should focus on reducing tariffs on industrial goods to increase the chances of a deal, German Economy Minister Peter Altmaier said on Tuesday.
A confidential US Commerce Department report sent to President Donald Trump over the weekend is widely expected to clear the way for him to threaten tariffs of up to 25 percent on imported autos and auto parts by designating the imports a national security threat.
“For some weeks and months now, we’re observing with concern that the US is tightening its trade policies, that tensions are increasing,” Altmaier told Deutschlandfunk radio.
“The impact can already be seen in the world economy, global growth has slowed,” Altmaier said.
Asked about the risk of higher US car tariffs, Altmaier said he did not buy the argument that imported cars would threaten the national security of the United States.
Altmaier, a confidant of Chancellor Angela Merkel, said that reducing tariffs on cars and other manufactured goods should be the main focus of the ongoing trade talks.
“We are not yet where we want to be. We might have made one-third of the way and the most difficult part will be now,” Altmaier said.
Altmaier added that he was in favor of reducing import tariffs for cars to the same level in the US and Europe, “ideally to zero percent.”
The trade talks will also be high on the agenda during a meeting of Altmaier with his French counterpart Bruno Le Maire in Berlin later on Tuesday.
Both ministers are expected to narrow differences on how far the negotiation mandate of the European Commission in the talks with the US should go and which areas should be excluded.
France is reluctant to open up its agriculture sector to US imports and Altmaier said he was fine with excluding the issue in the trade talks.
“Agriculture is a very sensitive topic, so we don’t want to talk about this in the current situation,” Altmaier said.
Altmaier and Le Maire are expected to hold a news conference after the talks.
European Commission President Jean-Claude Juncker told a German newspaper that Trump had promised him he would not impose additional import tariffs on European cars for the time being.
If Trump imposed tariffs on European cars, however, the EU would react immediately and not feel obliged to stick to its promise to buy more soybeans and liquefied gas from the United States, Juncker added.


US economists less optimistic, see slower growth: survey

Updated 52 min 51 sec ago
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US economists less optimistic, see slower growth: survey

  • While the odds of a US recession by 2020 remain low, they are rising
  • The odds of a recession starting in 2019 is at around 20 percent, and for 2020 at 35 percent

WASHINGTON: US economists are less optimistic about the outlook and sharply lowered their growth forecasts for this year, amid slowing global growth and continued trade frictions, according to a survey published Monday.
And while the odds of a recession by 2020 remain low, they are rising, the National Association for Business Economics said in their quarterly report.
The panel of 55 economists now believe “the US economy has reached an inflection point,” said NABE President Kevin Swift.
The consensus forecast for real GDP growth was cut by three tenths from the December survey, to 2.4 percent after 2.9 percent expansion in 2018.
The economy is expected to slow further in 2020, with growth of just 2 percent, the report said.
Three-quarters of respondents cut their GDP forecasts and believe the risks of to the economy are weighted to the downside.
“A majority of panelists sees external headwinds from trade policy and slower global growth as the primary downside risks to growth,” NABE survey chair Gregory Daco said in a statement.
“Nonetheless, recession risks are still perceived to be low in the near term.”
Panelists put the odds of a recession starting in 2019 at around 20 percent, and for 2020 at 35 percent, slightly higher than in December.
Daco said that “reflects the Federal Reserve’s dovish policy U-turn in January” when the central bank said it would keep interest rates where they are for the foreseeable future, a message reinforced this week.
After four rate increases last year, Daco said a “near-majority of panelists anticipates only one more interest rate hike in this cycle compared to the three hikes forecasted in the December survey.”
Panelists see wage growth as the biggest upside risk to the economy, despite expected increase of just 3 percent this year, as inflation holds right around the Fed’s 2 percent target.
Meanwhile, amid President Donald Trump’s aggressive tariff policies, the panel projects the trade deficit will rise to a record $978 billion this year, beating last year’s record $914 billion.
In an interesting twist in the survey, only 20 percent said they expected to see the dreaded “inverted yield curve” — when the interest rate on the 10-year Treasury note falls below the 3-month bill — this year.
In fact, the yield curve inverted on Friday for the first time since 2007.