Merkel backs reduced European Union tariffs to avert trade war

Schengen under threat as Austria hits back at Merkel's migrant deal

German leader warns US against "trade war"

German Chancellor Angela Merkel and Hungarian Prime Minister Viktor Orban shake hands after addressing the media in Berlin, Germany on July 5.

"If the talks with Greece and Italy fail, we will have to think again about measures", Seehofer said.

German officials are laying the groundwork for the deals they will also need to reach with neighboring countries to return migrants if the plan is to have any chance of working.

Kurz, an immigration hard-liner who governs in coalition with the far right and is close to Seehofer's CSU, said the two sides agreed Germany's plans at the border would not harm Austria and that they would instead work together on stemming illegal immigration.

Andrea Nahles, leader of the centre-left Social Democrats (SPD), and German Finance Minister Olaf Scholz, also an SPD member, stressed the agreement would not involve creation of any transit centres or unilateral action by Germany.

The agreement, aimed at settling a row that threatens to topple her three-month old government, has disconcerted some Social Democrats (SPD) who fear for the migrants' civil liberties.

Reuters reported that the United States ambassador to Germany, Richard Grenell, has repeatedly met with executives of German carmakers and major suppliers to discuss the issue.

He added that before any asylum-seekers are returned to Italy, "we want clear commitments on men, means and money to protect the external borders" of the EU.

The plan is in line with existing European Union rules, but countries on the bloc's outer borders such as Italy have said they're unwilling to take in all the migrants who arrive on their shores. Spiegel said she now appeared to recognise that European Union hardliners could no longer be ignored or stonewalled.

As the agreement was reached, a new poll conducted for broadcaster ARD showed growing public frustration over the migration debate.

Fifty-six percent of Germans felt too much focus was being put on migration, to the detriment of other issues.

Annual migrant arrivals have dropped sharply after peaking in 2015 at over 1 million people, many of them fleeing Syria's war and therefore entitled to asylum.

Seehofer said the meeting would happen in the run-up to a meeting of European interior ministers in the Austrian city of Innsbruck on Thursday and Friday of next week.

The Austrian government reacted furiously to a political deal by Angela Merkel's government to hold migrants at transit centres on its border with Germany, and said it was prepared to impose new controls on its own borders with Italy and Slovenia.

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