BERLIN (Reuters) - The German economy will be badly affected if U.S. President Donald Trump pursues protectionist trade policies, the head of the BDI industry group said on Tuesday, adding that any attempt to reverse globalization would be a big mistake.

Germany is one of the world's leading trading nations, deriving nearly half its gross domestic product from exports. In 2015, the United States became Germany's top trading partner, overtaking France for the first time since 1961, partly owing to the weakening of the euro caused in part by loose European Central Bank monetary policy.

"The consequences (of a protectionist United States) affect us Germans as a leading export and import nation particularly hard," BDI chief Dieter Kempf said in a speech in Berlin.

Speaking at the same BDI event, German President Joachim Gauck underlined the importance of business relations with the United States for the German economy, Europe's largest.


"With the inauguration of the new American president, it is to be feared that the country that is the most important sales market for German exports could depart from the principles of free trade," Gauck said.

Trump signed an executive order last week formally withdrawing the United States from the 12-nation Trans-Pacific Partnership trade deal. He has also threatened to impose a border tax of 35 percent on vehicles that German carmakers import to the U.S. market.

On Tuesday, Trump's top trade adviser, Peter Navarro, stepped up the pressure, accusing Germany of using a "grossly undervalued" euro to gain a competitive advantage. His remarks drew a rebuff from Chancellor Angela Merkel.

Kempf urged business leaders and governments to make the new U.S. administration understand the dangers of protectionism, adding that any attempt to reverse globalization and retreat into nationalism would put a country on the wrong track.

Gauck said that nationalistic approaches and unilateralist tendencies were also on the rise in Europe.

"If freedom of trade should be restricted, then our prosperity is also called into question," Gauck warned.

Senior German government officials such as Vice Chancellor Sigmar Gabriel have also suggested that German companies should take advantage of any trade opportunities in Asia and South America created by a more protectionist United States.

(Reporting by Gernot Heller; Writing by Joseph Nasr and Michael Nienaber; Editing by Gareth Jones and Kevin Liffey)

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