BERLIN (Reuters) – Germany and France will bring forward plans to introduce a common corporation tax system response to tax cuts announced by administration, .

The announcement comes amid unprecedented tensions between the U.S. under President Donald Trump and its - European allies ’s planned introduction of steel tariffs that Europe fears will distort global trade.

“We have decided, more emphasis than the past, to push on the “Common Corporation Tax France’ project,” Merkel her regular weekend podcast asked how Germany’s relative competitiveness could be maintained.

“That we decide on a joint corporation tax assessment basis for France and Germany, we will also consider the realities that are unfolding in ,” she added in response to questions by a business studies student.

At the end of last year, administration floated a tax plan that envisaged slashing the corporation tax from 35 percent -“very high”, according to Merkel – to 21 percent, prompting protests from European finance ministers.

The Europeans fear that international tax competition will increase because of the U.S. . So EU members, especially Germany and France, see the need for more tax policy corporation among themselves to make their markets more competitive.

Reporting by Thomas Escritt and Gernot Heller; Editing by Stephen Powell