BERLIN, GERMANY - FEBRUARY 24: Robert Habeck, the German Greens Party's chancellor candidate, addresses the press the day after the German parliamentary elections on February 24, 2025, in Berlin. The Greens finished fourth, garnering 11.6% of the vote, a decrease of 2.9% from the previous election. (Photo by Sean Gallup/Getty Images)

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On Thursday, Robert Habeck, acting German economy minister, stated that U.S. President Donald Trump will concede to external pressures and adjust his tariff policies if Europe unites in opposition.

"I believe that Donald Trump will yield under pressure, reassessing his decisions," he remarked during a press conference, as translated by CNBC. "However, this requires a concerted effort to exert that pressure from Germany, Europe, and in alliance with other nations, which will reveal the true strength in this confrontation."

Habeck emphasized that allowing Trump to continue or attempting to placate him would not be effective under any circumstances. Instead, he advocated for a "day of determination" as a response.

He articulated that while the goal should be to avoid tariffs and a trade war, the challenge lies in determining the most effective means to achieve that.

Habeck also encouraged Europe to make strategic investments to enhance its independence, citing improvements in cloud infrastructure and boosting capabilities in artificial intelligence and space technology as key areas.

"We can no longer rely solely on friendly relations," he stressed, reflecting on lessons learned from Germany's heavy economic dependency on Russian energy following the onset of the Russia-Ukraine war.

He remarked that Germany had paid a "high price for this oversight in economic and energy policy," and emphasized that such mistakes should not be repeated in other sectors. He suggested that addressing these issues should be a priority for the incoming government.

'Poorly conceived decisions'

Meanwhile, outgoing German Chancellor Olaf Scholz characterized Trump’s recent tariff decisions as "fundamentally misguided," according to CNBC translation.

He argued that these measures undermine the global trade system and described them as "poorly conceived decisions" that will ultimately harm the global economy. He warned that the current trajectory of the U.S. administration will lead to widespread disadvantage.

On Wednesday, Trump enacted a 20% tariff on goods from the European Union, targeting Germany as a key economy in the bloc, as he initiated a comprehensive "reciprocal tariff" policy.

Germany, heavily reliant on trade, is expected to feel the brunt of Trump's tariff imposition. The U.S. remains Germany's primary trading partner, surpassing China, with trade figures showing a total turnover of 252.8 billion euros ($278.7 billion) in 2024, according to data from Germany’s statistics office, Destatis. The U.S. also received the largest share of German exports last year.

As a result, the German stock index, the DAX was reported to be down about 1.6% by 10:42 a.m. London time, with German government bonds experiencing a noticeable decline. The yield on the 10-year Bund fell by over 7 basis points to 2.648%, while the yield on the 2-year Bund saw a decrease of more than 11 basis points to 1.93%.

EU gearing up for counteractions

In response to developments from the White House, European Commission President Ursula von der Leyen announced that the European Union is preparing countermeasures against the new tariffs imposed by U.S. President Trump, in the event that negotiations fall through.

"We are ready to respond," she stated. "We are in the process of outlining further counteractions to safeguard our interests and businesses if discussions fail."

However, von der Leyen emphasized the importance of transitioning "from confrontation to negotiation," indicating that it is not too late for a dialogue between the EU and the U.S.

Chancellor Scholz reiterated calls for collaboration on Thursday, indicating that Europe is prepared to defend its interests. "Europe will react as a unified, strong, and proportionate response to the U.S. decision," he assured.

On February 24, 2025, Robert Habeck, the German Greens Party chancellor candidate, addressed the media in Berlin following the German parliamentary elections, where his party secured 11.6% of the vote, a decline from the previous election. In a separate context, Habeck, who also serves as Germany's economy minister, expressed concerns regarding U.S. President Donald Trump’s recent tariff decisions and their potential impacts on the global trade landscape.

During a press conference, Habeck suggested that Trump would likely "buckle under pressure" if Europe unified in its approach and exerted collective influence on U.S. policies. He emphasized the need for strategic pressure from Germany and Europe, suggesting that a coordinated stance may compel Trump to reconsider his tariff announcements. This, he asserted, was essential in avoiding a trade war and ultimately securing favorable trade relationships.

Habeck also highlighted the importance of Europe becoming more economically independent, citing the detrimental effects of reliance on external actors, particularly in the aftermath of the Russia-Ukraine conflict that severely affected Germany's energy sector. He called for increased investment in infrastructure, notably in cloud computing, artificial intelligence, and space technologies, as a means of ensuring that Europe does not find itself vulnerable again in crucial areas of its economy.

Outgoing Chancellor Olaf Scholz echoed Habeck’s sentiments, critiquing Trump's new tariff regime, which includes a 20% levy on imports from the European Union, including Germany. Scholz characterized these tariffs as fundamentally misguided and predicted that they could lead to significant harm for the global economy, suggesting that such "poorly thought through decisions" would only create losers in the international trade environment. Given that Germany heavily relies on trade, particularly with the U.S., it stands to be one of the countries most affected by these measures.

As Trump’s administration announced aggressive "reciprocal tariff" policies, the market responded negatively, with the German stock index DAX experiencing a decline and government bond yields falling sharply. The potential economic fallout from these tariffs has raised alarm, as Germany's trade relationship with the U.S. is substantial, with 2024 trade figures showing a turnover of €252.8 billion ($278.7 billion).

In response to Trump's policies, European Commission President Ursula von der Leyen articulated that the EU was preparing to implement countermeasures to protect its economic interests if negotiations with the U.S. breakdown. She emphasized the importance of transitioning from confrontation to cooperation, advocating for negotiation as a viable option to resolve trade disputes.

Scholz reiterated the stance that Europe must respond collectively and robustly to defend its interests against U.S. actions, signaling a strong commitment to unity among EU member states in response to Trump's tariffs. The combination of Habeck’s and Scholz’s messages indicates an urgent call for strategic economic cooperation within Europe to navigate the challenges posed by U.S. trade policies.

Overall, the current discourse revolves around a critical juncture for Germany and the EU as they confront external pressures from U.S. trade strategies. The government's calls for unity, investment in independent capabilities, and strategic negotiation highlight their proactive stance in averting potential trade conflicts while securing economic stability for Europe in the face of evolving geopolitical dynamics.