Germany Seeks Resolution to Escalating US Tariff Row
German Chancellor Friedrich Merz is actively seeking a solution to the escalating trade dispute with the United States, following a threat from US President Donald Trump to impose a 30% tariff on imports from the European Union (EU) starting August 1. Merz stated on Sunday that he is working intensively with French President Emmanuel Macron and European Commission President Ursula von der Leyen to avert the tariffs.
The German Chancellor emphasized the severe impact such tariffs would have on the German economy, particularly its export-oriented industries. "If that happens, we could put large parts of our economic policy efforts on the back burner. Because that would overshadow everything and would hit the German export industry hard," Merz told German broadcaster ARD. Major German exporters like Volkswagen (VOW3.DE), BMW (BMW.DE), Daimler Truck (DTG.DE), and Siemens (SIE.DE) could face significant headwinds if the tariffs are implemented.
Merz indicated that while countermeasures are not ruled out, they would not be implemented before August 1, allowing for a two-and-a-half-week window for negotiations. He stressed the importance of unity within the European Union and maintaining open lines of communication with the US President to find a "reasonable solution." The EU has extended the suspension of its own trade countermeasures against the US until August 1 to facilitate further talks.
France Boosts Defence Budget Amid Complex Geopolitical Landscape
In a separate but equally significant development, French President Emmanuel Macron announced a substantial acceleration of France's defence spending. On Sunday, Macron pledged to double the country's military budget by 2027, three years ahead of its original 2030 target. This move comes in response to what Macron described as a "complex geopolitical moment," underscoring a heightened focus on national security and strategic autonomy within Europe.
The defence budget, which stood at €32 billion in 2017, is now projected to reach €64 billion by 2027. The plan includes an additional €3.5 billion allocated for the next year and another €3 billion in 2027. Macron asserted, "To be free in this world, we must be feared. To be feared, we must be powerful," highlighting France's commitment to strengthening its military capabilities.
This increased spending is expected to significantly benefit French defence and aerospace companies. Key players such as Airbus (AIR.PA), Thales (HO.PA), Dassault Aviation (AM.PA), and Safran (SAF.PA) are poised to see increased contracts and investment as the nation bolsters its military apparatus. The announcement reflects a broader trend among European nations to enhance their defence capabilities in light of ongoing global uncertainties.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.