Picture: 123RF/Jens Tandler
Picture: 123RF/Jens Tandler

Berlin — Germany’s trade surplus with the US narrowed slightly last year, according to figures issued on Wednesday, but that is unlikely to assuage US President Donald Trump who has stepped up his attacks on the EU over trade.

German exports of goods to the US in 2019 hit a record 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,” said Gabriel Felbermayr, president of the Kiel Institute for the World Economy.

After Trump claimed trade policy victories against China, Korea, Japan, Mexico and Canada, it is likely that he will now turn his anger on the eurozone, 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 eurozone has gone up quite substantially,” Felbermayr said, adding that Germany still accounts for more than 40% of that imbalance.

The US trade deficit with Germany edged down by €1.5bn to some €47bn in 2019, helped by a surge in German imports.

Excluding services, German goods exports to the US rose by 4.7% in 2019 to a record high of nearly €119bn, the data showed.

‘Worse than China’

German export growth overall slowed to 0.8% last year after 3.0% in 2018 and 6.2% 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 repeatedly threatened higher import tariffs on European cars, which would hit Germany especially hard. Germany narrowly avoided slipping into recession in 2019.

Jens Suedekum, a trade expert at the Heinrich Heine University in Düsseldorf, said the US remained the top destination for German exports partly because Washington’s major tariff disputes had so far been more with China.

“This alone boosts German exports, which become cheaper for American consumers when compared to Chinese goods on which they have to pay tariffs,” Suedekum said.

Demand for German goods in the US has also benefited from the robust state of the US economy, buoyed by huge deficit spending and tax cuts, he added.

“The US and China have reached a ceasefire at the moment, so Trump will shift his attention towards Europe, and Germany in particular,” Suedekum cautioned.

“The German export surplus is one of the major annoyances for him, and he might punish the entire EU for that.”

France remains Germany’s second-biggest export market, with foreign sales rising by 1.4% to nearly €107bn.

China again came in third place last year, with German exports growing by 3.2% to €96bn.

Combining exports and imports, China remained Germany’s biggest trading partner, with a volume of €206bn  in 2019.

Reuters

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