President Donald Trump and German Chancellor Angela Merkel arrive for a family photo during the Summit of the Heads of State and of Government of the G7, the group of most industrialized economies, plus the European Union, on May 26, 2017 at the ancient Greek Theater in Taormina, Sicily. (Miguel Medina / AFP/Getty Images)
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 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 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.
President Donald Trump has embarked on a nine-day loop around the Middle East and Europe, with stops planned in Saudi Arabia, Israel, Vatican City, Brussels and Sicily.
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 in its partners’ markets— as is the case with Germany and China.
He 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 could agree only on saying that that they are "working to strengthen the contribution of trade to our economies."
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 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.
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.