(Adds comment from VDMA president)
BERLIN, March 17 Germany could file a suit
against the United States at the World Trade Organization over
President Donald Trump's proposed border tax, the economy
minister said on Friday ahead of a meeting between Chancellor
Angela Merkel and Trump later in the day.
Trump has warned that the United States will impose a border
tax of 35 percent on cars that German carmaker BMW plans to
build at a new plant in Mexico and export to the U.S. market.
Asked how Germany would react to the proposed tax, Economy
Minister Brigitte Zypries told Deutschlandfunk radio it was very
difficult because of the complexities of such a tax system.
"The other option is that we file a suit against him at the
WTO - there are procedures laid out there because in the WTO
agreements it is clearly laid out that you're not allowed to
take more than 2.5 percent taxes on imports of cars," Zypries
Later on Friday Trump and Merkel are due to hold their first
meeting since the new U.S. president took office in January.
Merkel is likely to press Trump for assurances of support
for a strong European Union and a commitment to fight climate
change while he is expected to seek her support for his demand
that NATO nations pay more for their defense needs.
Germany's 50 billion euro trade surplus with the United
States has been a source of tension between Washington and
"We know ourselves that that's a problem and we're working
on it," Zypries said.
"Thankfully we just heard today that wage rises have been
agreed again so that means domestic demand can increase again
and we want to address tax incentives for research ... so we're
on a good path," she added.
Around 72,000 steel workers in northwestern Germany will get
2.3 percent more pay from April and then a further wage increase
of 1.7 percent from May 1, 2018 employers' group
Arbeitgeberverband Stahl said on Friday.
"The Americans need our machines and our plants ... and the
other point is that we only have an export surplus in the
machines and plants sector; in the service sector it's the other
way round," due to big internet companies in the United States,
Carl Martin Welcker, president of Germany's VDMA engineering
industry association, warned in an interview with newspaper
Tagesspiegel about the "poison of protectionist measures".
He said any such measures would hit Germany's engineering
sector hard at a time when there is widespread concern,
following Britain's decision to leave the European Union and
calls from French far-right candidate Marine Le Pen for a
referendum on France's EU membership.
"First there's America first, then England's withdrawal and
then perhaps a referendum in France soon - we're scared of this
contagious disease because we sell 75 percent of our products
abroad," Welcker said.
(Reporting by Michelle Martin; Editing by Nick Macfie and Toby