Merz warns Trump's tariff plans could spark global crisis
Future German Chancellor Friedrich Merz stated that Donald Trump's actions could significantly accelerate the onset of a global financial crisis. He emphasized his preference for Europe and the USA to reach an agreement on zero tariffs in their trade exchanges.
In an interview with the German daily "Handelsblatt," Merz expressed his hopes for a new transatlantic free trade agreement. "Zero percent tariffs on everything. That would be better for both sides," stated Merz.
Merz warns of a crisis
The future chancellor also shared his views on the potential impact if Trump maintains his tariff plan for the EU. "Europe would have to focus on non-American markets if the USA decides to withdraw completely from global trade," he pointed out.
Merz further warned about the consequences of a trade war.
"President Trump's policy increases the risk that the next financial crisis will hit sooner than we expect. As Europeans, we must devise a convincing response," said the German politician, who will officially assume office as Chancellor of Germany in May.
Zero for zero: The EU's proposal for the USA
Merz expressed support for the European Commission's "zero for zero" initiative, which proposes zero tariffs on certain goods, including cars. However, Donald Trump considered this insufficient and urged the EU to support the USA by purchasing energy from the States. Previously, Elon Musk also expressed hope for zero tariffs with Europe.
US President Donald Trump had earlier signed an order imposing "reciprocal tariffs" of at least 10 percent on imported goods from abroad, with tariffs for goods from the EU set at 20 percent.
The trade war sparks a strong market reaction
Donald Trump, however, suspended the tariffs for 90 days, excluding China. On Saturday, the USA announced a list of exceptions that tariffs will not cover - including electronics, such as smartphones. Tensions between China and the USA are escalating. The situation caused panic in the markets, which, in reaction to the trade war, turned red. Markets caught a brief reprieve after the suspension of tariffs but soon returned to declines.
At the same time, turmoil affected the US bond market. Bond yields rose significantly, leading to higher debt servicing costs for the USA. As detailed in Money.pl, this is a sensitive issue for America. "This is a kind of soft underbelly. A sell-off might hurt the USA," assessed Marek Rogalski from BOS brokerage. Experts believe that concerns over bonds prompted Donald Trump to suspend the tariffs.
