Schäuble Spells Out Surplus to Trump

G20 Finanzministertreffen
Mr. Schäuble is the messenger. Source: DPA/Uwe Anspach

German Finance Minister Wolfgang Schäuble is making an official visit to Washington for a semi-annual meeeting of the world’s finance ministers at the International Monetary Fund this week. He is expected to deliver an important message to US President Donald Trump on the sidelines.

Officials from the finance and economy ministries have put together a position paper to be given to the Trump administration. The hope is that it will stop some of the accusations against Berlin steadily flying from across the Atlantic.

Mr. Trump had previously referred to the EU’s single currency, the euro, as a “vehicle for Germany,” claiming that the country’s large current account surplus is a result of currency manipulation and poses a threat to the global economy. But Mr. Schäuble and his colleagues have crunched the numbers aiming to prove otherwise. An initial report rebuffing those claims was compiled already in February.

The new report to be delivered to Mr. Trump’s staff, a joint effort of Germany’s economics ministry and finance ministry, is slightly updated from the original. The paper aims to assuage US concerns, in part by claiming that the surplus, which ran at 8.3 percent of GDP last year, will not grow any higher. “Current forecasts predict that the surplus will fall further to 7.5 percent this year and to around 7 percent next year,” according to government experts.

The report also offers a series of explanations. It finds that about half the surplus is from “Made of Germany” products, which can’t be found at such a high industrial standard and quality anywhere else, according to Germany’s Der Spiegel, which first reported on the latest version of the document. Another quarter is due to high capital exports, and German businesses recently spending more money overseas than at home in order to break into new markets. One of the biggest examples is German investment in the US, totaling $63 billion in 2016, making Germany its third-largest direct overseas investor.

The German officials did admit that “economic policy interventions” need to be made in the interests of better balance, but they argued that several steps have already been taken. They pointed to measures including the minimum wage, introduced in 2015 and increased this year to €8.84, or $9.47.

Despite this, the German government refuses to admit the trade surplus is intentional. “Germany applies no protectionist instruments,” they wrote, adding that differing interest rate policies in the United States and euro zone have also added to trade imbalances.

Political analysts will just need to wait and see what emerges from the meeting, and whether, for example, Mr. Schäuble is able to garner a handshake from Mr. Trump himself.


Barbara Woolsey is a writer for Handelsblatt Global in Berlin. Martin Greive of Handelsblatt contributed to this story. To contact the author:

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