Published: 2018-07-04 15:40
Last Updated: 2018-07-04 22:21
German Chancellor Angela Merkel warned US President Donald Trump on Wednesday against unleashing an all-out trade war, after he threatened to impose steep tariffs on cars from the European Union.
"It is worthwhile to prevent this conflict from becoming a real war, however, this would require both sides to take steps,” Merkel said in a speech addressed to the Bundestag federal parliament.
Both sides were effectively locked in a "trade conflict" since Trump's decision to slap punitive tariffs on steel and aluminium imports.
Trump on Sunday charged that Europe is possibly as bad as China on trade, as he reiterated that he is mulling import taxes of 20 percent on EU cars.
The EU has slapped tariffs on iconic US products including bourbon, jeans and Harley-Davidson motorcycles, as a symbolic tit-for-tat response to the metals duties.
Taking aim at Trump over his complaint that the EU, and in particular economic powerhouse Germany, is running a massive trade surplus against the US, Merkel said that his calculation is skewed because it is based only on goods, not services.
With the US-EU trade row showing few signs of easing, European Commission President Jean-Claude Juncker is heading to Washington by the end of July to seek a way out of the conflict.
Relations between the US and other industrialised powers have turned increasingly tense as Trump has pushed his "America First" stance with punishing consequences for trading partners, irregardless of whether they are allies or adversaries.
Historically, strong ties between Berlin and Washington have also taken a beating, since the US leader repeatedly skewered Germany over its record trade surplus, as well as its relatively small defence spending.