Trump ruffles feathers by calling Germans 'bad' on trade

Posted: Updated:

By DAVID McHUGH
AP Business Writer

TAORMINA, Sicily (AP) - President Donald Trump has said Germans are "bad" for having a large 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."

White House economic adviser Gary Cohn sought to clarify the situation Friday, noting that the president "said they're very bad on trade, but he doesn't have a problem with Germany."

Trump, Cohn added, had noted that "his dad is from Germany" and said: "'I don't have a problem 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 and called the report "exaggerated."

It's not the first time Trump takes aim at Germany's trade prowess.

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 and fair as well as free so that it benefits U.S. workers and companies. He has focused on relationships where the U.S. buys more than it sells - as is the case with Germany and China.

Germany's trade imbalance 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 competitive goods such as 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 its X5 sport-utility vehicles in Spartanburg, South Carolina, and exports them to the rest of the world from there.

The European Commission says the German surplus is a mix of competitive goods and less obvious factors such an excess of savings over investment in an aging society.

A German government spokesman says trade surpluses like the one that's provoking Trump's ire are the result of market factors and are "neither good nor bad."

Spokesman Georg Streiter didn't comment directly on Trump's reported comments. He said that, in general, Germany's current account surplus reflects economic factors that are largely outside the government's direct control.

He said it was "also caused by factors that cannot, or at least cannot directly, be influenced by economic or financial policy measures in Germany." That includes not only the euro exchange rate but the price of oil or changes in demographics.

Copyright 2017 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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