Liana Fix on Trump and Merz, German Spending, Trade

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00:00So we obviously have a lot going on today, Liana, including perhaps more China discussions very

00:07imminently, restarting with the Commerce Secretary, Howard Lutnick, joining that delegation.

00:12But as it pertains to Europe, what does Germany's chancellor need to get across to the president

00:17today? Well, first of all, he has to establish a good personal relationship with the president.

00:24Apparently that was successful in the first meeting. He chose an approach of giving

00:29only very short response to Donald Trump, mostly agreeing with him on many issues. The main line

00:35that he was trying to drive home was on putting more pressure on Russia, arguing for that sanctions

00:41bill. On the EU trade side, he has not spoken a lot because obviously this is an issue for the

00:47European Commission. And it's a good situation for member states like Germany. They don't have to

00:53touch this issue too much in their bilateral relationship with Donald Trump. They can always

00:59refer to the European Commission. But of course, a good relationship with between Mertz and Trump

01:04will be helpful for the European Commission and for Ursula von der Leyen in negotiations in the future.

01:10Yep. President Trump did praise the fact that there was more defense spending happening now.

01:14Will he push for even more than what Germany is offering?

01:20The big question from this perspective is if Donald Trump actually will agree to the deal that NATO leaders

01:27are at the moment proposing to the United States, which is 3.5 percent in real defense spending and 1.5 percent

01:34in infrastructure and so on. That has been coordinated with Rubio, the US Minister that's been coordinated with

01:42Hexer. But in the end, it's going to be Trump who's going to decide if that is enough. Of course, Germany is in a good

01:49position because it has changed its constitutional debt break to basically have unlimited loan finance,

01:56defense spending in the future. Other European countries are not in such a privileged position as

02:02Germany is and have much less fiscal flexibility.

02:05Now, we know that the president will be speaking a little bit about trade to the chancellor, even though

02:10the chancellor isn't really mandated to discuss trade or to make any kinds of commitments or anything

02:16like that on behalf of Europe. But surely there will be a message in there. Germany, after all, is very dependent

02:22on the outcome of this.

02:24Yeah, the problem for Germany is that while on defense, it has improved its score with Donald Trump.

02:32On the trade deficit, it still doesn't look great. Germany is among the four countries of Mexico, China

02:36and Vietnam that have the greatest trade deficit with the United States. Investments, German investments in

02:43the U.S. have increased. So that's something that can show for Germany creates actually jobs in the United

02:51States. But the trade deficit issue is really important for Donald Trump. And again, in the European

02:56Union, Germany is a country with the biggest trade deficit with the United States. So he will not be able to

03:02escape that discussion entirely. And what he will probably propose is definitely more German investments in the

03:10United States, but also more German purchases of weapons of military goods from the United States to help

03:19alleviate the problem.