German chancellor Merz says weak dollar burdens exports

12:50

By: Dakir Madiha

German chancellor Merz says weak dollar burdens exports

Chancellor Friedrich Merz expressed concern Wednesday over the weakening US dollar, calling it a "considerable additional burden for German exporting industry." He urged Washington to honor its trade commitments with the European Union.

"We will have to assert ourselves globally against a weak dollar and strong euro," Merz told journalists in Berlin. "We simply must become more competitive and stronger, especially given exchange rates."

The EUR/USD rate surpassed 1.20 for the first time since February 2022 this week, driven mainly by dollar weakness. This followed President Donald Trump's comments to reporters in Iowa on Tuesday, where he dismissed worries over the dollar's drop, saying "I think it's great" and preferring it "find its own level."

Merz also warned the Trump administration against undermining last summer's EU-US trade deal, not yet fully ratified by the European Parliament.

"The foundations are now in place for this deal to take effect," Merz said at a joint press conference with Romanian Prime Minister Marcel Ciolacu. "However, the US must not be allowed to cast doubt on their commitment from last summer."

Merz highlighted pending final agreements on aluminum and steel. He cautioned against destabilizing rhetoric from Washington. "This uncertainty over tariffs harms not only transatlantic trade but also investments in America," he said.

The EU paused ratification efforts last week after Trump threatened tariffs on eight European countries over Greenland. The president later withdrew those threats following a NATO agreement.

Merz's remarks come as Germany's economy struggles. Economy Minister Katherina Reiche is expected to cut 2026 growth forecasts to 1.0% from 1.3% in the annual economic report on Wednesday.

Reiche said earlier this week Germany must seek new trade partners as traditional alliances "erode." She cited South America, India, and parts of Asia as potential alternatives.

"We are not willing to accept a deterioration of this deal," Merz said. He expressed strong desire for the EU to quickly ratify a separate trade deal with India concluded Tuesday.