Trump administration trade adviser Peter Navarro said on Monday the $65 billion U.S. trade deficit with Germany was “one of the most difficult” trade issues, and bilateral discussions were needed to reduce it outside of European Union restrictions.
Navarro, the director of the new White House National Trade Council, said that Germany has used the argument that the EU dictates its trade policy and that it does not control the value of the euro.
“I think that it would be useful to have candid discussions with Germany about ways that we could possibly get that deficit reduced outside the boundaries and restrictions that they claim that they are under,” Navarro told a National Association for Business Economics conference in Washington.
As WRM noted in his essay yesterday, Germany’s trade policies are not just a matter of concern for Trump’s protectionists, but pose serious long-term challenges for the Western order. Germany’s sustained growth and high trade surplus were built on the backs of weaker economies like Greece, Portugal, Italy, and Spain, whose economic woes have kept the Euro weak and in turn have given German exports a further advantage. The result has been prosperity within Germany but impoverishment elsewhere, along with a fraying of solidarity across the EU.
The Trump Administration is clearly concerned about German trade trends as they concern the United States. Nine of Germany’s top export industries overlap with the top American export industries, meaning the two countries engage in more direct trade competition than, say, the U.S. and China.
It remains to be seen how Germany will respond to the proposal. Berlin has little economic or political incentive to cave to Trump’s demands, especially ahead of a crucial election this year, and it prefers to work within the EU constraints that have helped German industries thrive. Still, a United States mobilized into a trade war has to send shivers down some spines in Berlin. At the moment they must be thinking, “Are these guys for real?” We’ll probably soon find out.