Germany is preparing to strike back against the U.S. if President Donald Trump follows through on his threat to kill off the Nord Stream 2 gas pipeline with additional sanctions.
Chancellor Angela Merkel’s administration is considering pressing for coordinated European Union action, according to two German officials familiar with the discussions. An economy ministry paper seen by Bloomberg News said such measures by the U.S. would be new and could hit significantly more German and European companies and banks as well as state agencies.
The 1,200-kilometer (745-mile) pipeline under the Baltic Sea, designed to pump Russian gas directly to Germany, has triggered deep division between EU member states. But the prospect of a direct U.S. intervention in the 27-member bloc’s energy interests should prompt a collective response, said the officials, who asked not to be identified.
The new German strategy adds the possibility of further escalation between the transatlantic allies, with the U.S. this week announcing potential tariffs on $3.1 billion of products from Germany and other European countries. Trump has also reiterated his intention to cut the number of U.S. troops in Germany and renewed a threat to hit the German auto industry with a new set of levies.
Flashpoints between the two sides are multiplying as Trump’s reelection campaign runs into trouble and the Covid-19 pandemic threatens to get out of control in the U.S.
On Friday, EU diplomats are holding talks over whether to maintain a ban on U.S. travelers when external border controls begin to lift last week. The officials are aiming to draw up a list of which countries’ nationals will be allowed in and may use infection rates as one of their criteria, which would potentially see the U.S. excluded.
In a Twitter post, German Health Minister Jens Spahn pointed to new infections in the U.S. as a sign that the pandemic has yet to peak.
The Europeans though are trying to ease the friction over digital taxes after the U.S. pulled out of talks aimed at finding a global agreement on how to tax internet giants like Facebook Inc. and Amazon.com Inc. In a letter to U.S. Treasury Secretary Steven Mnuchin seen by Bloomberg News, France, the U.K., Italy and Spain offered to initially limit the tax to automated digital services like search and social media, while excluding retailers like Amazon.
Trump has been ramping up his attacks on Germany since Merkel helped to derail his plans for a Group of Seven summit at Camp David this month and Nord Stream, owned by Gazprom PJSC, is a longstanding target. He told a rally last week in Tulsa, Oklahoma that Germany is “delinquent” on defense spending and dispatching “billions” to Vladimir Putin.
“We’re supposed to protect Germany from Russia, but Germany is paying Russia billions of dollars for energy coming from a pipeline,” Trump said. “Excuse me, how does that work?”
U.S. sanctions signed by Trump that targeted pipe-laying vessels in December threw the pipeline’s completion into disarray. While German officials said the project would merely be delayed, new measures proposed by U.S. senators could put Nord Stream in permanent danger, the German officials said.
But any response, including sanctions, would have to be weighed carefully, one official said. With Trump’s poll numbers sagging four months ahead of the U.S. presidential election, he could follow through on previous tariff threats — notably on German autos, the official said.