The U.S. is the biggest importer of German goods,
buying some $125 billion worth in 2015. And Germany is the No. 4 foreign market
for U.S. companies, which in 2015 exported $50 billion in products to the
country. Germany ran a current account surplus - the balance of goods, services,
and capital transfers - of about $310 billion last year, according to estimates
by the Center for Economic Studies, a research group in Munich.
Officials in the Trump administration are criticizing
German trade policies. According to them, the German surplus is due to a
massively undervalued currency. Germany is not happy with these accusations and
immediately responded. Chancellor Angela Merkel pointed out that the European Central
Bank (ECB) is in charge of the euro, and that the German government has long
upheld the ECB’s independence. Many in Germany are trying to remind the US that
free trade benefits both countries. Many companies are worried about the new
line American policies are taking. BMW is building a new $1 billion dollar
factor in Mexico and has already been told by Trump that they will face a 35%
tax to any cars manufactured there and brought to the US. Germany and the US do
a lot of business and it has helped both countries, this is something Germany
wants to see continue, but it may be up to the US to show that it can and
should.
Work Cited
Rauwald, Christoph, and Oliver Sachgau.
"Germany Inc. Touts Benefits of Trade After Trump Dumps on Euro."
Bloomberg, 01 Feb. 2017. Web. 11 Mar. 2017. https://www.bloomberg.com/news/articles/2017-02-01/germany-inc-touts-benefits-of-trade-after-trump-dumps-on-euro
It is troubling that President Trump wants to restructure so many trade agreements because he feels they are "unfair". In reality he wants to make the agreements unfair for anyone willing to enter into a trade agreement with the US. This could have seriously harmful effects on the US economy, many countries may just refuse to do business with the United States.
ReplyDeleteI'm glad you pointed out the plants being built in Mexico. I am curious how the German automobile company can be hit with a tariff by the United States for goods that are manufactured and traded by a member country of NAFTA
ReplyDeleteI was unaware of the surplus that Germany had last year. I think it makes sense that the U.S. President question this; however, I think it should be done cautiously. Germany and The United States have an important trade relationship. If we were to offend Germany they may choose not to do business with us. This would have tremendous, negative effects on the U.S. economy. - Lorreen McCabe
ReplyDeleteLorreen, your point is important. Global trade is truly global and the US is not the only 'super trader' on the block that it once was. Germany certainly relies on the US import of German goods however--an amount that is more than double what Germany imports from the US.
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