Undercurrents of trade conflict surge; Germany plans to use potash to counter US tariff pressure.

The trade game between the US and Europe is heating up again, with bilateral economic and trade frictions showing a trend of continuous intensification. Last week, the US announced an increase in import tariffs on EU-produced passenger cars and trucks from 15% to 25%. The US accused the EU of delaying the fulfillment of relevant terms in the bilateral trade agreement reached last July, using this as a pretext to unilaterally impose tariff hikes, further exacerbating economic and trade conflicts between the US and Europe.

In response to the US move to impose additional tariffs, Europe quickly responded with a tough stance. French President Macron explicitly stated that if the US insists on imposing a 25% tariff on EU cars, the EU should launch the anti-coercion mechanism to counterattack. The European Commission also spoke out on Tuesday, urging the US side to return to the original tariff levels agreed upon in the US-EU trade agreement last year as soon as possible to avoid a further escalation of the trade conflict.

Although both sides still verbally call for the resumption of trade negotiations, contingency plans for confrontation are brewing behind the scenes. Sources indicate that Germany has begun formulating countermeasures against the US. Insiders revealed that if the US continues to escalate pressure in trade and security areas, potash could become an important alternative tool for Germany to check the US economy.

Potash is a key agricultural input category on which the US is highly dependent on imports, with 90% of US potash demand relying on external supply. In terms of the supply landscape, Canada firmly holds the position as the largest source of US potash imports, with Germany ranking second. In the global potash industry structure, Canada's Nutrien is the world's largest potash producer, and Germany's K+S Group, based in Kassel, is also a leading enterprise in the industry, occupying a significant share in the global and US markets.

Currently, German officials are comprehensively reviewing the US dependence on potash imports from Germany, deeply assessing policy space, and studying feasible paths to promote local potash companies like K+S to reduce exports to the US, reserving a policy toolbox for subsequent countermeasures.

Undercurrents Surging: Germany and Canada Brew Joint Supply Control, but Game Prospects Remain Uncertain

Market trends indicate that Germany intends to join forces with Canada to check US trade protectionist behavior by coordinating the regulation of potash exports. German Finance Minister Lindner will visit Canada later this week, and it is widely believed that this trip will involve consultations on topics such as potash supply and economic and trade games. However, insiders admitted that at this stage, Germany has not finalized any potash restriction measures, and the government still tends to repair German-US economic and trade relations, having no intention of falling into a full-scale trade confrontation.

Canada, on the other hand, is cautious and ambiguous in its stance on the potash game. Currently, Canada is focusing on negotiating tariff disputes with the US in multiple industries such as steel, aluminum, automobiles, and timber, and is unwilling to create new complications. Canadian Prime Minister Carney previously explicitly stated that he would not use energy and key minerals as bargaining chips in US trade negotiations, casting uncertainty over the German-Canadian joint supply restriction.

On the US side, to hedge against the potential risk of potash supply cutoffs from Germany and Canada, it is accelerating the layout of diversifying potash import sources. In March this year, after Belarus released 250 political prisoners, the US government announced the lifting of relevant sanctions on core Belarusian potash production enterprises, becoming an important consensus for cooperation reached recently between the US and Belarus.

Belarus was once a global core potash production powerhouse. Before Western sanctions triggered by the Russia-Ukraine conflict, its potash output once met nearly one-fifth of global market demand, boasting strong resource and production capacity foundations. Additionally, according to a report by the Belarusian state news agency last month, Lukashenko proposed selling a large potash mine to the US for 3 billion USD and stated that the US side has started evaluating the acquisition plan, although the two sides have not yet agreed on a reasonable price, and follow-up cooperation is still in discussion.

Overall, the US-EU auto tariff dispute is only the surface; behind it, the game has extended to key resource areas such as potash. On one side, Europe is planning to use resource tools to counter US trade protectionism; on the other side, the US is opening up new supply channels in various ways to hedge against supply chain risks. The global economic, trade, and key resource landscape is welcoming a new round of deep reconstruction.