Is Germany’s record trade surplus doing more harm than good?
frankfurt — Germany’s latest record trade surplus announced on Thursday may be a point of pride for some, but experts warn the imbalance is doing more harm than good as grumbling grows in the Trump White House.
The country exported €253 billion ($270 billion) more than it imported in 2016, the federal statistics office Destatis said. Exports added 1.2 per cent to top €1.2 trillion, while imports climbed 0.6 per cent to €955 billion.
Germany’s trade surplus has repeatedly broken records in the years since the 2008-09 financial crisis. The new high is likely to feed criticisms from the US and elsewhere that Germany exports too many of its machine tools, chemicals and cars, while failing to reinvest the proceeds.
US President Donald Trump’s top trade advisor Peter Navarro accused Berlin last month of exploiting a “grossly undervalued” euro to boost its exports.
Germany’s trade surplus is around half that of the $510 billion China booked in 2016, but well ahead of Japan’s $36 billion or Brazil’s $48 billion.
Meanwhile, the United States recorded a $502-billion trade deficit last year — importing more than it exported — and France a deficit of $51 billion. Elected on promises to bring jobs and manufacturing back onto American soil after decades of offshoring, Trump and his team are hunting for export sinners to target. “When you walk down Fifth Avenue, everyone has a Mercedes-Benz in front of his house,” the president complained in an interview with German tabloid Bild shortly before his inauguration.
“You’ve been very unfair with the US,” he went on, “it’s a oneway street.”
In a sharp retort, German vicechancellor Sigmar Gabriel responded: “The US needs to build better cars.”
Trump is far from the first foreign leader to bemoan German surpluses, as the Obama administration, the International Monetary Fund and European neighbours like France have all criticised the imbalance.
German Finance Minister Wolfgang Schaeuble agreed in an interview last weekend that “the exchange rate is too low” between the euro and the dollar, but noted that it was the European Central Bank that decided monetary policy for the entire single currency area.