Sunday

28th May 2017

US picks new fight with Merkel

  • Germany is the EU’s top exporter, selling items worth more than €1.2 trillion a year abroad. (Photo: Bundesregierung/Kugler)

The new US administration has once again antagonised Germany, this time by accusing it of currency manipulation.

Peter Navarro, a top trade adviser to US leader Donald Trump, told the Financial Times newspaper on Tuesday (31 January) that Germany was keeping the euro, which he called an “implicit Deutsche Mark”, artificially low so that it could sell more goods to other EU states and to the US.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

  • Navarro's comments are latest EU attack by Trump administration (Photo: Gage Skidmore)

“Germany … continues to exploit other countries in the EU as well as the US with an ‘implicit Deutsche Mark’ that is grossly undervalued,” he said.

He complained about Germany’s “structural imbalance in trade with the rest of the EU and the US” and said he was “worried” that the US trade deficit was hampering domestic growth.

Referring to the draft EU-US free trade treaty, TTIP, he said Brexit had “killed” it “on both sides of the Atlantic” before Trump was elected.

He also said the US wanted to manufacture more products at home in order to “spur job and wage growth” in a sign of increasing protectionism.

Angela Merkel, the German chancellor, rejected Navarro’s claim.

She said while on a visit in Stockholm on Tuesday that “Germany is a country that has always called for the European Central Bank [ECB] to pursue an independent policy, just as the Bundesbank did before the euro existed”.

“Because of that we will not influence the behaviour of the ECB. And as a result, I cannot and do not want to change the situation as it is,” she added.

Navarro’s accusation came after Trump in a recent interview called the EU a “vehicle for Germany”, praised Brexit, and said other member states would leave the European Union.

It also came amid broader strains in relations, with Merkel having led EU criticism of Trump on issues such as his anti-Muslim travel ban.

Germany is the EU’s top exporter, selling items worth more than €1.2 trillion a year abroad.

It had a record trade surplus with the US in 2015 and is expected to post another one, worth more than €60 billion, for 2016.

The ECB, which decides on monetary policy in the 19-member eurozone, is not expected to take any big steps amid low inflation, modest growth, and falling unemployment.

Trump attacks

Trump’s EU attacks have prompted emotional reactions in Europe.

“Trump is showing himself what he really is, a president promoting the isolation of the United States, who wants to destroy the EU,” Gianni Pittella, an Italian MEP who leads the Socialist group in the European Parliament, told the Sky News broadcaster on Tuesday.

He urged the UK not make the “big mistake” of letting Trump use it as an anti-EU “Trojan horse”.

Jeroen Dijsselbloem, the Dutch finance minister who also chairs eurozone meetings, said the EU should conclude trade pacts in Asia, Latin America, and Africa in reaction to Trump’s rhetoric on protectionism.

"Our cooperation with China … is very important. Economically, increasingly important, but also politically," Dijsselbloem told the RTL broadcaster on Tuesday.

He said that the EU should take pre-emptive measures even if his bark ends up being worse than his bite.

“Europe must not sit back and blindly wait for what happens in the United States, but move ahead itself, also in the area of trade”, he said.

Navarro’s comments saw the euro increase in value on currency markets.

Figures out on Tuesday also noted that eurozone core inflation was just 0.9 percent, that its GDP grew by 0.5 percent in the last three months of last year, and that unemployment was at its lowest since May 2009 on 9.6 percent.

Hidden problems

The good news masked entrenched problems in some southern states, however.

Greece had the worst unemployment rate on 23 percent followed by Spain on 18 percent.

The situation has showed increasing risk of political fallout amid talks between Greece and its EU and International Monetary Fund (IMF) creditors.

The EU does not want to give Greece debt relief and is pressing for further austerity measures.

Nikos Xydakis, a former minister for EU affairs in the government of the left-wing Syriza party, said Greece had “run out of stamina” and should consider quitting the euro.

“There should be no taboos when we’re talking about the nation’s fate. We have come to a point where the populace has run out of stamina. I believe we need an in-depth political and national discussion [on eurozone membership],” he told the Skai TV broadcaster on Tuesday.

Stelios Kouloglou, a Syriza MEP, said Greece should leave in a coalition with Italy, where populist parties want to quit the currency.

“Italy may leave. If that happens Greece should hide behind it and leave at the time,” he said.

Europeans in US 'not optimistic'

EU diplomats in Washington say getting access to the Trump administration is difficult and are concerned by Trump's trade and Russia policies.

Stakeholders' Highlights

  1. UNICEFChild Alert on Myanmar: Fruits of Rapid Development yet to Reach Remote Regions
  2. Nordic Council of MinistersBecome an Explorer - 'Traces of Nordic' Seeking Storytellers Around the World
  3. Malta EU 2017Closer Cooperation and Reinforced Solidarity to Ensure Security of Gas Supply
  4. European Healthy Lifestyle AllianceHigh-Intensity Interval Training Is Therapeutic Option for Type 2 Diabetes
  5. Dialogue Platform"The West Must Help Turkey Return to a Democratic Path" a Call by Fethullah Gulen
  6. ILGA-EuropeRainbow Europe 2017 Is Live - Which Countries Are Leading on LGBTI Equality?
  7. Centre Maurits CoppietersWhen You Invest in a Refugee Woman You Help the Whole Community
  8. Eurogroup for AnimalsECJ Ruling: Member States Given No Say on Wildlife Protection In Trade
  9. European Heart NetworkCall for Urgent Adoption of EU-Wide Nutrient Profiles for Nutrition & Health Claims
  10. Counter BalanceInvestment Plan for Europe More Climate Friendly but European Parliament Shows Little Ambition
  11. Mission of China to the EUPresident Xi: China's Belt and Road Initiative Benefits People Around the World
  12. Malta EU 2017EU Strengthens Control of the Acquisition and Possession of Firearms

Stakeholders' Highlights

  1. International Partnership for Human RightsThe Cost of Speaking Out: Human Rights Violations Committed in Belarus
  2. ACCABanishing Bias? Audit, Objectivity and the Value of Professional Scepticism
  3. Nordic Council of MinistersNew Oslo Climate Declaration Focuses on Rising Temperatures in the Arctic
  4. European Healthy Lifestyle AllianceAbdominal Obesity: A Causal Risk Factor for Cardiometabolic Diseases
  5. EU Green Week 2017Discuss EU Environmental Policies With Industry Experts and Thought Leaders
  6. GEN Summit 2017Join the World's Leading Media Summit for Thought-Provoking Talks and Experiences
  7. International Partnership for Human RightsTogether for Human Rights: A Year in Review
  8. Malta EU 2017EU All Set for Free Roaming Starting 15 June
  9. Nordic Council of MinistersRefugee Unemployment Biggest Drain on Public Purse, Says New Nordic Studies
  10. Dialogue Platform17,000 Women, 515 Babies in Turkish Prisons, a Report Reveals
  11. European Healthy Lifestyle AllianceCharlotte Hornets' Nicolas Batum Tells Kids to "Eat Well, Drink Well, Move!"
  12. ECR GroupSyed Kamall: We Need a New, More Honest Relationship With Turkey