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15.07.2025 11:11 AM
Trump's Actions Alarm Germany

While the euro remains relatively stable, German Chancellor Friedrich Merz is not feeling as confident.

In a recent interview, he stated that U.S. President Donald Trump's threat to impose 30% tariffs would strike at the core of Germany's economy, hitting exporters of Europe's largest economy at its very foundation. For this reason, he emphasized the urgent need to resolve the trade conflict through negotiations in the coming weeks.

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Merz, known for his pragmatism and focus on German business interests, stressed that the imposition of such tariffs would be disastrous for Germany's economy—particularly for the automotive and mechanical engineering sectors, which have traditionally been its main drivers. He called for immediate action at the European Union level to prevent an escalation of the trade war.

Beyond the direct economic consequences, Merz also expressed concern about the political fallout of such a move. He warned that a trade war with the United States could undermine transatlantic relations and weaken the Western alliance as a whole—especially dangerous given the growing geopolitical instability.

The chancellor also emphasized that Germany is open to constructive dialogue with the United States but is not willing to make concessions that would harm its economic interests and sovereignty. He urged both sides to seek a compromise that would avoid the destructive consequences of a trade war and help maintain global economic stability.

"If this happens, the German government may have to postpone some of its economic measures," Merz said in the interview. "It would overshadow everything else and hit the German export sector at its core." Merz added that he is closely coordinating efforts with other EU leaders to ensure that tariffs of such magnitude are not implemented. "This requires two things: unity within the European Union and strong communication channels with the American president," said the conservative leader.

When asked whether Germany supports retaliatory tariffs against the U.S., Merz responded: "Yes, but not before August 1." He said he had discussed the issue in detail over the weekend with French President Emmanuel Macron and European Commission President Ursula von der Leyen, and that he had also held a phone call with Trump on Friday.

"We want to use this time—these two and a half weeks before August—to find a solution," Merz said. "I'm truly committed to this."

As a reminder, the European Union has extended the suspension of its countermeasures against the U.S. until August 1 to allow for further negotiations. However, a second package of retaliatory tariffs has already been prepared.

As for the current technical picture of EUR/USD:

Buyers now need to focus on reclaiming the 1.1700 level. Only this will open the way for a test of 1.1720. From there, it could be possible to reach 1.1750, though doing so without support from large market players will be quite challenging. The furthest target is the 1.1790 high. In the event of a decline, significant buying interest is expected only around the 1.1660 level. If buyers do not appear there, it would be advisable to wait for a drop to the 1.1625 low or consider long positions from the 1.1595 level.

As for the current technical picture of GBP/USD:

Pound buyers need to overcome the nearest resistance at 1.3455. Only then can they aim for 1.3490, though breaking above that will be quite difficult. The furthest bullish target is the 1.3530 level. If the pair declines, bears will attempt to regain control at 1.3410. If successful, a break of this range could deal a serious blow to the bulls' positions and push GBP/USD down to the 1.3375 low, with a further decline toward 1.3346.

Jakub Novak,
Analytical expert of InstaForex
© 2007-2025
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