German businesses call for action after EU-US trade 'detente'

Pursuing a limited trade deal was the central part of a truce agreed in July 2018 when European Commission President Jean-Claude Juncker (L) and US President Donald Trump promised no new tariffs after those on the steel and aluminium

German businesses on Thursday cautiously cheered a plan by US President Donald Trump and European Commission chief Jean-Claude Juncker to ease trade tensions, but said words must now be backed by actions.

"The promised solutions are going in the right direction, but a good deal of scepticism remains," said Eric Schweitzer, president of the DIHK chambers of industry and commerce.

The head of the Federation of German Industries (BDI), Dieter Kempf, praised the breakthrough in EU-US trade talks as an "important sign of detente".

"The tariff spiral in transatlantic trade appears to have been halted," he said, stressing however that "the words must now be followed by actions."

After talks with Juncker on Wednesday, Trump said the two leaders had agreed to "launch a new phase" in the relationship and work towards "zero tariffs" and trade barriers on non-auto industrial goods.

Juncker said that as long as negotiations are ongoing both sides would hold off from further tariffs -- putting Trump's threat of imposing hefty duties on European vehicles on ice.

Shares in German carmakers BMW and Volkswagen surged more than 4.0 percent on the news Thursday morning before falling back.

- Stepping back from the abyss -

Some analysts however criticised a lack of detail about the agreement, pointing out neither party explicitly mentioned the car industry.

But the head of the German Association of the Automotive Industry (VDA), Bernhard Mattes, nevertheless welcomed the "real chance" to avert damaging car tariffs.

"What matters now is to bring this agreement to life and quickly start the negotiations," he said.

The German Federation of the Chemical Industry (VCI) said in a statement that the outcome of the Washington talks gave "hope for a turnaround" in the trade spat, but warned that "a long road lies ahead".

"It's not a real deal yet, but it's a step away from the abyss," Holger Schmieding, chief economist at Berenberg Bank summed up.

The German government also praised the outcome of the Juncker-Trump meeting, with Foreign Minister Heiko Maas saying it showed the power of a united EU.

"Europe showed yesterday that it won't be divided. And we have also seen that if Europe is united, then our words have weight. Then we can speak to everyone with confidence and as equals," Maas tweeted.

Economy Minister Peter Altmaier had late Wednesday hailed the EU-US plan as a "breakthrough... that can avoid trade war & save millions of jobs".