German industry lashes out at Trump's 'ludicrous' demands

By Rene Wagner and Rachel More

BERLIN, Jan 18 (Reuters) - German industry reacted with anger on Sunday to U.S. President Donald Trump's planned use of tariffs to crank up the pressure on Denmark to sell Greenland, calling on Europe not to cave in to his demands.

Trump has vowed to implement a wave of increasing tariffs on European allies until the U.S. is allowed to buy the strategically important island - expanding a trade war days before the EU's parliament is set to vote on tariff cuts.

"If the EU gives in here, it will only encourage the U.S. president to make the next ludicrous demand and threaten further tariffs," said Bertram Kawlath, president of the German engineering association VDMA.

"Highly controversial political goals are being tied to economic sanctions in an unacceptable manner," said Volker Treier, a foreign trade specialist at the German Chamber of Commerce and Industry (DIHK).

EXPORTERS LOOK TO EU FOR STRONG RESPONSE

Both called for a unified response from the European Union.

This could include the EU's 'Anti-Coercion Instrument', which allows the bloc to retaliate against third countries that put economic pressure on EU members to change their policies.

Saturday's threat could derail tentative deals Trump struck last year with the European Union and Britain, which is also a target of the planned Greenland tariffs.

The VDMA and DIHK cast doubt on the likelihood that EU lawmakers would vote on the deal with Washington this month, principally involving the removal of many EU duties on U.S. goods imported into the bloc.

"The European Parliament cannot possibly decide on tariff cuts for the U.S. next week as long as Washington is putting pressure on the European Union with new punitive tariffs," Kawlath said.

However, the head of the IfW economic research institute said the economic effects of the Greenland tariffs would be manageable for Germany.

"Only about 10% of our foreign trade is with the U.S. It is important that the EU does not allow itself to be blackmailed, but stands together and stands up to him," IfW President Moritz Schularik told Reuters.

(Editing by Louise Heavens)