Germans Fly to U.S. Ready to Counter Trump's Surplus ComplaintsBy
Berlin can’t do much to shrink balance, position paper says
U.S. benefits from German investments, imports of machinery
Chancellor Angela Merkel’s government has a message for President Donald Trump: Germany’s trading excellence is a boon not a threat to the U.S.
Finance Minister Wolfgang Schaeuble flies to Washington on Wednesday for the Spring Meetings of the International Monetary Fund, armed with an 8-page position paper. In anticipation that he’ll be cornered by U.S. officials, Schaeuble’s paper highlights the U.S. jobs that depend on Germany and points out that companies and consumers are primarily responsible for his country’s huge trade surplus.
While Merkel aims to strengthen Germany’s domestic economy and expects the surplus to shrink to around 7 percent of gross domestic product by next year from a peak of 8.6 percent of GDP in 2015, many of the factors driving the excess are outside the government’s control, said the paper. The document prepared by the Economy Ministry and Schaeuble’s office was obtained by Bloomberg News before his departure for the U.S.
“A large part of the current account surplus is determined by factors which can not be directly influenced by German economic and financial policy,” said the document, which was prepared for the eventuality that talks on the subject arise in Washington. “These include temporary factors such as the euro exchange rate or commodity and energy market prices.”
The new U.S. president has called on Germany to rein in its 253 billion-euro ($272 billion) trade surplus, saying he may impose stiff tariffs on imported goods.
While the Trump administration concedes that no major trading partner is manipulating its currency for an unfair trade advantage, Germany is one of six countries on Trump’s foreign-exchange monitoring list.
“As a member of the European Union, Germany does not pursue an independent trade policy,” the paper said. “Rather, trade policy is the competence of the EU. The policy of the federal government is in line with all international trade agreements and arrangements, in particular it is also World Trade Organization-compliant.”
Germany is one of America’s most important trading and investment partners, with 10 percent of all foreign direct investment in the U.S. coming from Germany, the report noted in a nod to what’s at stake for bilateral business relations. German companies in the U.S. employ around 672,000 workers and U.S. companies benefit from German machinery that helps maintain the country’s competitiveness and sustain jobs, it said.
— With assistance by Carolynn Look