Merkel will make 'every effort' to avoid US trade war

Chancellor Angela Merkel said she will make "every effort" to avoid a trade war with the United States and repeated her pledge to increase defence spending, addressing two major points of contention in the US-German relationship.

Speaking in the German parliament on Wednesday, Merkel said "it is worth making every effort to try to deescalate this conflict so that it does not become an all-out war ... Germany is definitely committed to it as is the entire European Union."

EU tariffs on jeans, peanut butter and other US products - levied in response to the US imposing tariffs of 25 per cent on steel and 10 per cent on aluminium imports - took effect last month.

US President Donald Trump announced the metals tariffs in March, citing a law giving the president broad powers to adjust trade on national security, and exempted just a handful of countries that made concessions that included setting quotas on exports to the US.

Also in the Bundestag on Wednesday, Merkel reiterated her pledge to increase defence spending to 1.5 per cent of gross domestic product (GDP) by 2024 - a sum estimated by experts to be around 60 billion euros (69.3 billion dollars).

Referring to the country's current defence budget of 38.9 billion euros, Merkel said, "Measured against what other countries do in relation to their GDP, it is not remotely enough."

She was referring to another bone of contention with Trump, who recently addressed a letter to Germany stating that it is not pulling its weight as a NATO member.