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Trump’s Exec Orders on Trade Deficit Irk Merkel Government

Trump’s Exec Orders on Trade Deficit Irk Merkel Government

President Trump of taking U.S. in “completely the wrong direction”, says Germany’s Economy Minister

President Donald Trump’s latest executive orders on foreign trade have irked Chancellor Angela Merkel’s government, prompting tough talk from Berlin.

On Friday, President Trump signed two orders seeking to identify trade abuse and other malpractices carried out by foreign governments in order to lower the U.S. trade deficit. Merkel’s second-in-command, German Vice Chancellor Sigmar Gabriel, described Trump’s moves as unlawful, claiming that he wants to “favour American companies, even if it contradicts international law.”

Germany’s Economy Minister Brigitte Zypries said that President Trump was taking the U.S. in  “completely the wrong direction” and “moving away from free trade” by signing those executive orders. Minister Zypries had previously threatened to take the U.S. to court if the Trump administration were to impose import duties on German products.

In the next 90 days, the Trump administration hopes to produce a country-by-country, product-by-product report to identify foreign governments that subsidize their exports — making their products below-market price. The current U.S. trade deficit stands at around $500 billion, with Germany accounting for some $65 billion of that deficit, nearly doubling its share during President Obama’s tenure.

Earlier this year, Trump’s top trade advisor Peter Navarro accused Germany of using a “grossly undervalued” Euro to “exploit” the US and its trade partners. Navarro also called the growing U.S. trade deficit a “risk to American security and prosperity.”

German public broadcaster Deutsche Welle reported the Merkel government’s reaction:

Following US President Donald Trump’s executive orders signed on Friday to review causes of US trade deficits, Germany’s Economy Minister Brigitte Zypries said US President Donald Trump is signaling policy decisions that would send the country in “completely the wrong direction.” […]

The orders that Trump signed will look into why it has trade deficits with some of its most important partners, including China, Canada and Germany.

Trump repeated on Friday claims that he made throughout his campaign about seeking to bring back industrial jobs to the US. Before signing the orders, he said it was time to “correct” bad agreements with other countries and claimed that “thousands of factories have been stolen from our country.” […]

The US obviously wants to move away from free trade and trade agreements,” Zypries said in an interview with the German weekly “Welt am Sonntag,” adding, “We must seek constructive dialogue and explain that the reasons for the US trade deficit are not just abroad.” […]

Germany’s Vice Chancellor and Foreign Minister Sigmar Gabriel has said he shares Zypries’ concerns. Gabriel told German newspaper “Rheinische Post” that Trump’s executive orders signaled the US government “is ready to favor American companies, even if it contradicts international law.” [DW News, March 3, 2017]

Statements coming from Berlin make it clear that Merkel’s government is heading for a showdown with the Trump administration on the issue of trade. Merkel, however, does not want to fight this battle alone. Merkel instead wants the E.U. to do to her bidding and challenge Trump on trade.

Ahead of Merkel’s last month’s U.S. visit, leading German magazine Der Spiegel had formulated Merkel government’s stance towards policies advocated by Trump. The magazine had cautioned U.S. readers in its English edition that if Trump sticks to his ‘America First’ policy, the E.U. was ready to “brace for [a] trade war”:

But what happens in the likely event that Trump sticks to his “America First” plans? If that happens, then Merkel is expected to push for a united EU front to blockade Washington. [Der Spiegel, March 10, 2017]

Merkel is shoring up her defenses by teaming up with China, the number one source of the U.S. trade deficit. Beijing is a willing ally in Merkel’s trade jihad. China is posing as a fervent advocate of free trade ever since Trump announced his intent to reduce $350 billion worth of trade deficit with the Asian giant.

On the day Merkel headed for Washington, she issued a joint statement with the Chinese President Xi Jinping, stressing the “importance of open markets”. It was a well-timed salvo against Trump’s America First policy.

Despite tough talk coming from Berlin, Merkel lacks the political courage to have a go at it on her own. Merkel, however, is very deft at building unprincipled coalitions. That’s how she has ruled Germany and ran the E.U. for over a decade. On the other hand, Trump is a negotiator and likes to deal with partners face to face.

Trump’s trade advisor Peter Navarro has already made it clear to Berlin that U.S. wants to negotiate bilateral trade issues ‘outside of European Union’. And with Merkel’s own political future in limbo as her country heads for polls later this year, it’s unlikely that other European leaders would risk their political capital to back Merkel’s in any possible trade conflict.

Video: Treasury Secretary Steven Mnuchin in Germany, U.S. had no desire for “trade wars” [March 2017]:

[Cover image courtesy Phoenix TV, YouTube]


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President Trump has asserted, and I think he believes it is true, that Germany is a mooch on its own defence and has let down NATO. He also asserts in the same manner that Germany is unscrupulous on trade deals with the US.

Which is most important to the Germans? US defense umbrella or its trade surpluses? I think Trump has made it clear, Germany can’t have both.

The question is, I think, does the United States need Germany’s trade more, or does Germany need the US’s trade. The answer is obvious by Merkel enlisting others to strengthen her hand. But the truth is, China needs the US more than Germany does. China will not stand behind Germany any longer than is necessary to use them to test the waters with the US.

China is bluster at this point. They will see how serious Trump is, and will make the best possible deal for themselves when the time comes. Marginal partners get screwed all the time, but strategic partners can’t be easily replaced.

Amazing that an EO to conduct a study to find out the “why” and the impact of an activity can cause so much angst in some people.

A lot of the Executive Actions have required a review of activity with the development of a plan of action. Specifically, the departments are being tasked with looking for ineffective, duplicate and wasteful programs. What programs that remain can then be operated in a more effective way.

It will be important for Trump to have more televised sessions with Congress explaining what his Administration is doing. We won’t be able to have the MSM report accurately the cause and the impact.

Maybe Germany could reconsider all of the import duties and taxes directed at US exports? Or would that violate the international law that makes it legal for non-US nations to cheat the US? It’s one of those “only white people can be racists” rules. There are no foul balls when batting against the American pitching.

    VaGentleman in reply to Pasadena Phil. | April 4, 2017 at 12:28 pm

    Since WWII, the US consumer / taxpayer has provided the seed $, major technologies, and markets that pulled the free world up from poverty, while at the same time protecting their freedom. It’s time we looked out for ourselves. If they can’t carry their share now…

      MattMusson in reply to VaGentleman. | April 4, 2017 at 12:36 pm

      That was the mission of the Bretton Woods deal set up by the USA in 1945. It guaranteed our friends and allies free access by sea to raw materials and markets – enforced by the US Navy. It also guaranteed tariff free access to the US Market. And, it allowed war-torn Europe, then China, India and the 3rd world to export themselves into affluence.

      It also guaranteed a Trade Imbalance and exported US jobs out of the country. But – Trade was a Political Tool.

      Now – for the 1st time in 70 years – US Trade is an end in itself. The Gravy Train has taken to the siding.

Germany (and the EU) has shown no reluctance to use trade as a weapon in the Brexit negotiations. Their commitment to free trade is only for one way free trade.

What’s amazing is that Trump has to ask for an analysis to determine exactly why and what causes our balance of trade deficit. Me thinks that should have been a standard report from Commerce. Did they not want to know? It reminds me of an article by a top Reagan aide who revealed that, after getting several CIA briefs, Reagan asked – you always tell me where the Soviets are strong. I want to know where they are weak and how to exploit it. The reply was that no one had ever asked about Soviet weakness. From that question came the policy that ended the cold war.

    I suspect that a lot of the information is available and may be a “standard” report upto some level. It may be that someone at a higher level told them not to send it up to them.

    Whenever I moved to a new job, I frequently asked my new staff if they understood the report they were creating. If they didn’t know the why, I stopped sending it up the chain until I figured it out and for someone to ask for it. Many reports were stopped and better ones were created and everyone understood them.

    “That’s the way we always done it” is an excuse and not a reason.

Maybe Germany could reconsider all of the import duties and taxes directed at US exports? Or would that violate the international law that makes it legal for non-US nations to cheat the US? It’s one of those “only white people can be racists” rules. There are no foul balls when batting against American pitching.

Merkel doesn’t have the courage to reverse her stupid immigration policy and try to save her country. She has too many problems to make more for herself.

Beijing is a willing ally in Merkel’s trade jihad.

Only so far as it’s all talk. There’s approximately zero chance that China will try to actually play hardball on trade.

And because this is so obvious, by even making noise about a united front with China, Merkel’s already shown her hand … and it’s a bluff.

notamemberofanyorganizedpolicital | April 4, 2017 at 1:31 pm

Anything that upsets Comrade (Communist) Merkel is a very good thing!

Make America Great Again!! Trump will do it.

If Merkel wants a trade war, we’ll OK. I can drive GM cars and drink CA wine. See if the EU.will buy all those Mercedes and bmws.

If Merkel wants a trade war, we’ll OK. I can drive GM cars and drink CA wine. See if the EU.will buy all those Mercedes and bmws. Maybe Venezuela or in Cuba can take some.