The German foreign ministry has summoned the US ambassador to answer reports of mass-scale US spying on the European Union.
"If it is confirmed that diplomatic representations of the European Union and individual European countries have been spied upon, we will clearly say that bugging friends is unacceptable," said Merkel's spokesman, Steffen Seibert.
"We are no longer in the Cold War."
Germany wanted an EU-US free trade deal to boost transatlantic economic growth and employment, said Seibert. But he warned: "Mutual trust is necessary in order to come to an agreement."
Relations between the US and Europe plummeted as new disclosures emerged of the National Security Agency (NSA) in the US spying on its European allies.
Berlin accused Washington of treating Germany like the Soviet Union. The European Commission demanded answers to the allegations.
The Guardian and the German publication Der Spiegel revealed that the NSA, operating from the Nato HQ on Brussels, had infiltrated secure telephone and computer networks at the Justs Lipsius venue for EU summits in the Belgian capital.
Documents and slides seen by Der Spiegel and leaked by NSA whistleblower Edward Snowden indicated that US agencies bugged the offices of the EU in Washington and at the UN in New York.
Other documents "partly seen" by the German magazine report that more than five years ago security officers at the EU spotted several missed calls targeting the remote maintenance system in the building. The documents reviewed by Der Spiegel showed that Germany was treated in the same US spying category as China, Iraq or Saudi Arabia.
Germany's justice minister, Sabine Leutheusser-Schnarrenberger, called for an explanation from the US authorities.
"If the media reports are true, it is reminiscent of the actions of enemies during the cold war," she told the German newspaper Bild. "It is beyond imagination that our friends in the US view Europeans as the enemy."
France also asked the US for an explanation. "These acts, if confirmed, would be completely unacceptable," said foreign minister Laurent Fabius.
"We expect the American authorities to answer the legitimate concerns raised by these press revelations as quickly as possible."