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Trump criticizes German trade surplus, again

From left, Canadian Prime Minister Justin Trudeau, German Chancellor Angela Merkel, President Donald Trump, Italian Prime Minister Paolo Gentiloni, French President Emmanuel Macron, Japanese Prime Minister Shinzo Abe, British Prime Minister Theresa May, European Council President Donald Tusk and European Commission President Jean-Claude Juncker sit around a table during the G7 Summit in Taormina, Sicily, Italy, Friday, May 26, 2017. (Jonathan Ernst/Pool Photo via AP)

TAORMINA, Sicily (AP) — President Donald Trump has criticized Germany’s trade surplus with the United States, drawing attention to a contentious issue at a summit of world leaders where trade is already a sticking point.

As the leaders of seven wealthy democracies gathered for difficult talks on trade and climate change, Germany’s Der Spiegel reported that Trump had told EU leaders the day before that the Germans were “bad, very bad” when it came to trade.

White House economic adviser Gary Cohn said the president’s comments focused on the surplus and not the country: “He said they’re very bad on trade, but he doesn’t have a problem with Germany.”

Cohn noted that “his dad is from Germany” and that he had said: “‘I don’t have a problem with Germany. I have a problem with German trade.”

The president of the European Union’s executive commission, Jean-Claude Juncker, said Trump was “not aggressive” in his comments about the surplus and called the report “exaggerated.”

It’s not the first time Trump has taken aim at Germany’s trade success. In January, he said that German car manufacturers like BMW could face U.S. tariffs of up to 35 percent if they set up plants in Mexico instead of in the U.S. and try to export the cars to the U.S.

Trump has said he wants trade to be balanced, fair and free so it benefits U.S. workers and companies. He has focused on relationships in which the U.S. buys more than it sells in partners’ markets– as is the case with Germany and China.

Trump also has pushed back against earlier G-7 agreements to “fight all forms of protectionism.” G-7 finance ministers meeting in Bari, Italy, earlier this month agreed only to say they are “working to strengthen the contribution of trade to our economies.”

German Chancellor Angela Merkel said she spoke to Trump about the matter.

Merkel said Friday at the summit that it’s well known that Germany sells more to the U.S. than it buys from America, “which on the one hand has to do with the quality of our goods,” but noted that there is also a lot of German direct investment in the U.S.

“In my opinion, one has to see these things together,” Merkel said.

She also noted that Germany should not be singled out. German news agency dpa reported that she said: “We have a currency union. We are practically a common market. To pick out one country is, I think, not so appropriate.”

Trump is not the only leader to criticize Germany’s trade surplus. Then-Prime Minister Matteo Renzi of Italy said last year that it wasn’t good for the eurozone economy.

Germany’s trade surplus with the United States is part of its large overall surplus with the rest of the world. Last year, Germany ran a current account surplus — the broadest measure of trade and investment flows — of 8.7 percent of annual economic output.

The country benefits from producing competitive goods such as luxury autos and industrial machinery that are in demand in the rest of the world. A weaker euro has helped the export performance.

Germany, however, can’t do much about the euro: its exchange rate has been driven down by troubles like the debt woes in Greece, and the policies of the European Central Bank.

Further complicating the picture, some large German companies also invest, hire and produce in the United States.

BMW, for instance, makes sport-utility vehicles in Spartanburg, South Carolina, and last year exported 70 percent of them — or 288,000 vehicles –to the rest of the world.

Daimler AG makes Mercedes-Benz cars in Tuscaloosa County, Alabama, while Volkswagen has a plant in Chattanooga, Tennessee.

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