By John Schoen
President Donald Trump's recent comments and angry tweets about Germany's "unfair" trade practices could leave the U.S. as the odd man out in the global economy.
Fresh from a meeting in Brussels with the leaders of the Group of Seven largest economies, Trump fired yet another tweet salvo at a longtime U.S. ally, sharply attacking Germany's trade and spending policies.
"We have a MASSIVE trade deficit with Germany, plus they pay FAR LESS than they should on NATO & military. Very bad for U.S. This will change," the president said.
"Recent days have shown me that the times when we could rely completely on others are over to a certain extent," Merkel said Monday in a speech in Berlin. "Europe must take its fate into its own hands."
Merkel and other German officials have taken pains to explain that German trade is governed by agreements forged by the European Union in Brussels, not by German officials in Berlin.
The Trump administration has also taken Germany to task for what it sees as a "weak euro" policy; German officials have countered that the European currency is managed by the European Central Bank, not by individual member states.
But the main source of Trump's frustration is the imbalance between the total value of goods and services that U.S. consumers buy from Germany compared with the amount of goods and services the U.S. sells to Germans.
U.S. trade with Germany
Last year, the U.S. ran a trade deficit in goods and services with Germany of about $65 billion, down from $75 billion in 2015.
Much of that imbalance comes from U.S. imports of German machinery, pharmaceuticals and
Trump would like to see American consumers buy domestic cars and trucks, and has said he believes trade deficits represent a "bad deal" for the United States.
Some economists argue that the surplus cash generated by a given country through trade often comes back to the U.S in the form of capital investment.
"Growth prospects for Europe, longer term, will be greatly enhanced if Europe can access China's Silk Routes and thus acquire an additional four billion customers for its exports. This is the basis for a sea change in global power. Watch out."
"The U.S. has a trade deficit because consumers have money to spend — and they spend it," said Merrill Matthews, resident scholar
But Trump's Twitter tantrum with Germany, and his protectionist stance last week with European
"President Trump effectively disavowed the United States' role as the leader of world trade and globalization," he said in a note to clients.
Weinberg cautioned that Trump's scolding of European leaders will only prompt those countries to forge closer ties with China, whose leaders have made clear they are happy to fill any economic void created by the United States' move toward more isolationist policies.
"Growth prospects for Europe, longer term, will be greatly enhanced if Europe can access China's Silk Routes and thus acquire an additional four billion customers for its exports," said Weinberg. "This is the basis for a sea change in global power. Watch out."