BERLIN — Amid renewed trade tensions between the European Union and the United States, Germany has reaffirmed its primary support for diplomacy to reduce import tariffs, while also preparing for retaliatory measures if negotiations fail.

At the same time, domestic economic pressures are mounting, with the private sector showing signs of weakening due to concerns over the tariff policy.

Joerg Kukies, Germany’s Finance Minister, stated in an interview with Deutschlandfunk radio, quoted on Thursday (24/4), that Germany prefers a peaceful resolution to the tariff dispute with the US.

“Plan A is to reach an agreement and reduce tariffs. But we are also ready with Plan B: supporting retaliatory steps by the European Union if negotiations break down,” he said, while attending the IMF and World Bank meetings in Washington.

Data from S&P Global and the IMF, cited in Handelsblatt’s 22–24 April 2025 report, revealed that Germany’s private sector has contracted for the first time in four months.

The Composite Purchasing Managers’ Index (PMI) fell to 49.7 in April, below the 50 threshold that separates growth from contraction, and well under the forecast of 50.5. The decline was led by the services sector, which fell to a 14-month low of 48.8.

Meanwhile, France also saw its PMI drop to 47.3, with significant pressure on its services sector. A gloomy outlook for global trade was the main factor, compounded by domestic political instability, which could prompt snap elections by President Emmanuel Macron.

Overall, these developments place Germany and the broader European region in a challenging position—pushing for a diplomatic solution with the US while also grappling with increasingly evident economic pressures at home. (EF/ZH)