German opposition's chancellor candidate backs free trade talks with Trump

German conservative leader Friedrich Merz, who is favoured to succeed Olaf Scholz as chancellor, would support a new attempt at talks on a free trade deal with the United States in response to tougher trade conditions, he told German news agency dpa.

Europe's economy will face challenging conditions under U.S. President-elect Donald Trump, Merz said in an interview published on Thursday, but the response should be for Germany, and Europe, to restore competitiveness, not impose tariffs.

"We need a positive agenda with the U.S. that benefits American and European consumers alike," Merz said.

"A new European-American initiative for joint free trade could prevent a dangerous spiral of tariffs," added the leader of the opposition Christian Democrats.

Trump, who is set to take office roughly a month before Germany holds federal elections, ended talks on a proposed trade deal between the European Union and the U.S. during his first term and instead pressed a number of trade disputes with the EU.

Ahead of the 2024 U.S. vote, Trump said he would place high tariffs on EU goods, which would hit the already lagging German economy particularly hard as the United States is the largest buyer of its goods.

Merz added that Germany needed to gradually lower its corporate taxes to 25% and tackle non-wage labour costs to make it an attractive place to do business again.

Then Germany could tell the United States: "Yes, we are ready to face this competition with you as well," he said.