Merz Invites Japan to Back Trade Alliance as China Asks Germany to Be ‘Rational’

German Chancellor Friedrich Merz attends the ISEAS 49th Singapore Lecture, in Singapore, October 27, 2026. (Reuters)
German Chancellor Friedrich Merz attends the ISEAS 49th Singapore Lecture, in Singapore, October 27, 2026. (Reuters)
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Merz Invites Japan to Back Trade Alliance as China Asks Germany to Be ‘Rational’

German Chancellor Friedrich Merz attends the ISEAS 49th Singapore Lecture, in Singapore, October 27, 2026. (Reuters)
German Chancellor Friedrich Merz attends the ISEAS 49th Singapore Lecture, in Singapore, October 27, 2026. (Reuters)

German Chancellor Friedrich Merz on Wednesday urged Japan to back a proposed global alliance to defend rules-based trade that he has been touting during a week-long Asia trip.

An alliance of "like-minded partners" ‌would help ‌countries resist the growing use of tariffs ‌and ⁠economic coercion, he ⁠told a business summit in Tokyo, according to prepared remarks.

"Should the rules of the global trading system be violated by others, or should economic coercion be employed, we could coordinate our actions within the alliance and present a united front," he said, an apparent ⁠reference to the US and China.

In ‌responding to Merz's proposal, ‌China said it hoped Germany and the EU would be "objective and ‌rational" and that it was committed to working ‌with all parties to maintain the stability of trade and supply chains.

Merz's initiative echoes calls by Canadian Prime Minister Mark Carney this year for the world's middle powers to ‌work more closely together to counter pressure from larger economies.

"If we move forward together, ⁠the ⁠question will no longer be whether we are 'on the menu' or 'sitting at the table'," Merz said, invoking a line used by Carney during his January speech.

"Because in that case, the restaurant itself belongs to us."

Germany sees China as both a massive trading partner and a strategic rival. Coinciding with Merz's visit, a report said Germany's trade deficit with Asia-Pacific is set to hit a record of nearly €146 billion ($163 billion) in 2026 as falling exports to China outweigh growing sales elsewhere in the region.



Mercedes to Cut More Jobs as Chinese Competition Bites

Mercedes-Benz CEO Ola Kaellenius gestures as he participates in a talk during the Berlin Global Dialogue 2026 in Berlin, Germany, 21 October 2026. EPA/CLEMENS BILAN
Mercedes-Benz CEO Ola Kaellenius gestures as he participates in a talk during the Berlin Global Dialogue 2026 in Berlin, Germany, 21 October 2026. EPA/CLEMENS BILAN
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Mercedes to Cut More Jobs as Chinese Competition Bites

Mercedes-Benz CEO Ola Kaellenius gestures as he participates in a talk during the Berlin Global Dialogue 2026 in Berlin, Germany, 21 October 2026. EPA/CLEMENS BILAN
Mercedes-Benz CEO Ola Kaellenius gestures as he participates in a talk during the Berlin Global Dialogue 2026 in Berlin, Germany, 21 October 2026. EPA/CLEMENS BILAN

Premium German carmaker Mercedes-Benz will restart a voluntary redundancy program and is in discussion with unions over further cost-cuts, its chief executive Ola Kaellenius said Wednesday after the firm warned on full-year profits.

"Germany accounts for roughly 15 percent of our sales, but two-thirds of our employees and structures are based here," Kaellenius told reporters and investors on an earnings call to present third-quarter results.

"To reduce our fixed costs further, we have decided to restart the severance program in Germany in December," he added, without giving a target number of job cuts.

German carmakers have struggled with cutthroat competition and falling demand in China, the world's largest car market, leading to painful adjustments at home.

Mercedes-Benz on Tuesday became the third of the big three German carmakers -- alongside Volkswagen and BMW -- to have issued a profit warning for the year, citing difficulties in China.

BMW aims to cut 8,000 jobs by the end of 2027 with its own voluntary redundancy program, and the Volkswagen Group plans to have cut 120,000 jobs globally by the end of the decade across its brands, which include Porsche and Audi.

Kaellenius said Mercedes-Benz could not give more detail since discussions were ongoing, adding that he was nevertheless pressing hard to get costs down.

"We will continue with determination to adjust the structures of the company to fit the revenue position of the company," AFP quoted him as saying.

Labor costs in China, Hungary, Romania and the United States are all lower than in Germany, Kaellenius said, adding that "eastern Europe as a whole is open to any industrialist looking to expand.”

Net profit for the third quarter rose almost 30 percent to 1.52 billion euros ($1.69 billion) even as overall sales declined 4.5 percent to 30.7 billion euros, largely the result of a collapse in China.

But Kaellenius said the company could not afford to abandon the Chinese market despite an intense price war driven by over 100 competing carmakers.

"If you're a global car company like Mercedes, there's not a play where you put China aside," he said.


Merz Invites Japan to Back Trade Alliance as China Asks Germany to Be ‘Rational’

German Chancellor Friedrich Merz attends the ISEAS 49th Singapore Lecture, in Singapore, October 27, 2026. (Reuters)
German Chancellor Friedrich Merz attends the ISEAS 49th Singapore Lecture, in Singapore, October 27, 2026. (Reuters)
TT

Merz Invites Japan to Back Trade Alliance as China Asks Germany to Be ‘Rational’

German Chancellor Friedrich Merz attends the ISEAS 49th Singapore Lecture, in Singapore, October 27, 2026. (Reuters)
German Chancellor Friedrich Merz attends the ISEAS 49th Singapore Lecture, in Singapore, October 27, 2026. (Reuters)

German Chancellor Friedrich Merz on Wednesday urged Japan to back a proposed global alliance to defend rules-based trade that he has been touting during a week-long Asia trip.

An alliance of "like-minded partners" ‌would help ‌countries resist the growing use of tariffs ‌and ⁠economic coercion, he ⁠told a business summit in Tokyo, according to prepared remarks.

"Should the rules of the global trading system be violated by others, or should economic coercion be employed, we could coordinate our actions within the alliance and present a united front," he said, an apparent ⁠reference to the US and China.

In ‌responding to Merz's proposal, ‌China said it hoped Germany and the EU would be "objective and ‌rational" and that it was committed to working ‌with all parties to maintain the stability of trade and supply chains.

Merz's initiative echoes calls by Canadian Prime Minister Mark Carney this year for the world's middle powers to ‌work more closely together to counter pressure from larger economies.

"If we move forward together, ⁠the ⁠question will no longer be whether we are 'on the menu' or 'sitting at the table'," Merz said, invoking a line used by Carney during his January speech.

"Because in that case, the restaurant itself belongs to us."

Germany sees China as both a massive trading partner and a strategic rival. Coinciding with Merz's visit, a report said Germany's trade deficit with Asia-Pacific is set to hit a record of nearly €146 billion ($163 billion) in 2026 as falling exports to China outweigh growing sales elsewhere in the region.


Gold Slips on Oil-Fueled Inflation Fears Ahead of Fed Meeting

Ingots of 99.99 percent pure gold are placed in a workroom at the Novosibirsk precious metals refining and manufacturing plant in the Siberian city of Novosibirsk, Russia, September 15, 2023. (Reuters)
Ingots of 99.99 percent pure gold are placed in a workroom at the Novosibirsk precious metals refining and manufacturing plant in the Siberian city of Novosibirsk, Russia, September 15, 2023. (Reuters)
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Gold Slips on Oil-Fueled Inflation Fears Ahead of Fed Meeting

Ingots of 99.99 percent pure gold are placed in a workroom at the Novosibirsk precious metals refining and manufacturing plant in the Siberian city of Novosibirsk, Russia, September 15, 2023. (Reuters)
Ingots of 99.99 percent pure gold are placed in a workroom at the Novosibirsk precious metals refining and manufacturing plant in the Siberian city of Novosibirsk, Russia, September 15, 2023. (Reuters)

Gold prices ticked lower on Wednesday after the previous session's climb of about 1%, as higher oil prices stoked inflation fears while investors awaited the Federal Reserve's policy decision later in the day for clues to the rate outlook.

Spot gold was down 0.5% at $4,037.11 per ounce by 0743 GMT. US gold futures for December delivery dropped 0.6% to $4,051.30.

"Gold is moving ‌based on ‌the interest rate expectations and inflation risks because ‌of ⁠higher energy prices," ⁠said Soni Kumari, an analyst at ANZ.

"As a result, the Fed will remain cautious, which remains a short-term key headwind for gold."

Oil prices climbed more than 1% on Wednesday.

Elevated energy prices raise expectations ⁠that the Fed will keep interest rates higher ‌for longer, increasing the opportunity cost ‌of holding non-yielding bullion.

Markets await the Fed's policy decision due ‌at 1800 GMT, along with the Personal Consumption Expenditures data ‌on Thursday, a key gauge closely watched by the central bank as it targets a 2% inflation rate.

Traders largely expect the Fed to leave rates unchanged today but are pricing in a chance of ‌about 84% for a December rate hike, according to the CME's FedWatch Tool.

High inflation will ⁠persist in ⁠the global economy well into next year, according to hundreds of economists polled by Reuters.

Meanwhile, analysts cut their 2026 gold price forecast for a second straight quarter due to high Treasury yields, a strong US dollar and expectations that rates will stay higher for longer, but still expect a recovery in 2027, a Reuters survey showed.

Additionally, analysts and traders cut their platinum and palladium price forecasts for 2026 for a third straight quarter, a Reuters survey showed.

Among other metals, spot silver slid 1% to $53.81 per ounce, platinum lost 0.6% to $1,530.49 and palladium dipped 0.2% to $1,024.15.