‘Germany is not safe’ despite trade surplus with US

BERLIN: Germany’s trade surplus with the United States narrowed slightly last year, data showed on Wednesday, but that is unlikely to assuage US President Donald Trump who has stepped up his attacks on the European Union over trade.
German exports of goods to the United States in 2019 hit an all-time high, the Federal Statistics Office data showed, even though Germany also bought more US vehicles, animal feed and pharmaceuticals in a modest rebalancing of trade.
Trump, long critical of Germany’s big surpluses, signalled on Monday that he wanted to restructure the more than $1 trillion US trade relationship with the EU, raising the spectre of another major tariff war as the global economy slows and he seeks re-election.
“Germany is not safe,” Gabriel Felbermayr, president of the Kiel Institute for the World Economy, said.
After Trump claimed trade policy victories against China, Korea, Japan, Mexico and Canada, it is likely that he will now turn his anger towards the euro zone, said Felbermayr. Germany is the EU’s biggest economy and by far its biggest exporter.
“Even if the US deficit with Germany has fallen a little bit, US data suggest that the deficit with the euro zone has gone up quite substantially,” Felbermayr said, adding that Germany still accounts for more than 40 per cent of that imbalance.
The US trade deficit with Germany edged down by 1.5 billion euros to some 47 billion euros last year, helped by a surge in German imports, the new data showed.
Excluding services, German goods exports to the United States rose by 4.7 per cent in 2019 to a record high of nearly 119 billion euros ($130 billion), the data showed.
Overall, German export growth slowed to 0.8 per cent last year after 3.0 per cent in 2018 and 6.2 per cent in 2017, the data showed, as manufacturers faced weaker global demand and increased business uncertainty linked to trade disputes and Brexit.
Trump has said the EU is “worse than China” on trade and has repeatedly threatened to impose higher import tariffs on European cars, which would hit Germany especially hard. Germany narrowly avoided slipping into recession last year.
Jens Suedekum, a trade expert at the Heinrich-Heine-University in Duesseldorf, said the US remained the top destination for German exports partly because Washington’s major tariff disputes had so far been more with China. — Reuters