German conservative politician Friedrich Merz, who is expected to follow Olaf Scholz as chancellor, said he would favor a fresh round of free trade discussions with the United States in reaction to stricter trade terms.

Merz stated in an interview released Thursday that Europe's economy would confront hard conditions under US President-elect Donald Trump, but the reaction should be for Germany and Europe to regain competitiveness rather than imposing tariffs.

According to Merz, "We need a positive agenda with the U.S. that benefits American and European consumers alike," adding that "A new European-American initiative for joint free trade could prevent a dangerous spiral of tariffs."

Trump, who will take office around a month before Germany's federal elections, halted discussions on a potential trade agreement between the European Union and the US during his first term and instead pursued a series of trade disagreements with the EU.

Before his reelection, Trump stated that he would impose significant tariffs on EU exports, which would hurt the already struggling German economy especially hard because the US is the major importer of its commodities.

EU foreign policy chief Josep Borrell issued a warning on November 21 that Trump's proposed tariffs and foreign policy approach could have "far-reaching consequences" for the transatlantic relationship.

Merz went on to say that Germany has to progressively reduce its corporate taxes to 25% and address non-wage labor expenses in order to become an attractive location to conduct business again.

He expressed that Germany could then tell the US "Yes, we are ready to face this competition with you as well."

Trump tells EU to buy US oil, gas or face tariffs: Financial Times

The Financial Times (FT) reported in mid-December that US President-elect Donald Trump warned the EU that it must agree to purchase "large scale" amounts of US oil and gas or face tariffs.

“I told the European Union that they must make up their tremendous deficit with the United States by the large-scale purchase of our oil and gas. Otherwise, it is TARIFFS all the way!!!” Trump wrote on his Truth Social platform.

Trump's threat comes after Brussels had already expressed interest in purchasing more US-liquefied natural gas, which has become crucial for the EU following Russia's reduction of fossil fuel supplies after it invaded Ukraine.

In November, European Commission President Ursula von der Leyen stated that the EU would consider increasing its purchase of gas from the US, according to FT.

“We still get a lot of LNG from Russia and why not replace it with American LNG, which is cheaper for us and brings down our energy prices,” she told reporters.

“It seems odd as a ‘threat’ given that von der Leyen alluded to the possibility of doing precisely this,” one EU official observed.

Trump has threatened a blanket tariff of up to 20% on all non-Chinese US imports. In November, European Central Bank President Christine Lagarde urged Europe's political leaders to work with him on tariffs and increase purchases of US-made products.