Shortly after Germany retaliated to Trump’s overnight press attack, when German economy minister Sigmar Gabriel said on Monday morning that Germans would gladly buy US automobiles if only America could “build better cars”, and that – responding to Trump’s criticism of Germany’s “catastrophic” refugee policy – he said there “is a link between America’s flawed interventionist policy, especially the Iraq war, and the [European] refugee crisis”, Merkel fired her own shot across the bow of Trump’s proposed protectionism, when she told industry leaders late on Monday that she would remain committed to free trade, rebutting Trump’s comments about a border taxes on car imports.
Taking advantage of the anti-populist wave stirred by Trump, Merkel, speaking to the German Chamber of Commence and Industry in Cologne, urged industry leaders to remain supportive of the German government in the forthcoming Brexit negotiations between Britain and the European Union. “We can’t let anyone divide us,” she said quoted by Reuters.
As far as free trade and open markets go, Merkel told the industrialists her government was prepared to fight to preserve them.
“We’ve got to fight this battle, if for no other reason than principle,” Merkel said, referring to Germany’s commitment to the free trade, and asking German business to “join her in defending liberal democracy and trade”, saying “in every generation one has to fight for one’s ideals.”
“I’m ready for that,” Merkel added.
“I have the impression that we are once again at a crossroads,” Merkel tells a business chamber gala in Cologne, hinting at an ideological crusade to rid the world of backward-looking protectionists.
Indeed, she then said that halting protectionism is part of the struggle, and would not give up on free-trade deals with the U.S. “I have a lot of resolve, but the number of doubters is growing,” says she’s “deeply convinced” that “embracing competition rather eliminating it is best for human development and for prosperity in Germany.”
Needless to say, Merkel has never met anyone quite like Trump.
She then appealed to the audience to resist giving up those principles “too hastily for reasons of short-term gain.”
Merkel echoed words from her Finance Minister Wolfgang Schaeuble earlier on Monday, who issued a not so thinly veiled warning to Trump over the dangers of protectionist trade policies.
“Whoever wants growth – and I trust this administration will be a growth-friendly one – must be in favor of open markets,” Schaeuble told the Wall Street Journal in an interview. “Protectionism can afford short-term advantages but is almost always damaging in the long term.”
Of course, Keynes himself said the same thing about Keynesian economics, the bedrock of all modern economic thinking, but that’s a different topic.
As for Germany and its preparedness for an “ideological” crusade against Trump and the world’s protectionists, be careful what you wish for.