German Chancellor Angela Merkel on Tuesday struck back at US President Donald Trump's repeated complaints over the US trade deficit, saying the United States actually runs a surplus with the European Union — if services and certain financial transactions are factored alongside goods into the equation.
Current accounting systems for global trade, she said, needed to be updated to also take these forms of trade into account.
Calculations are 'old-fashioned'
"Trade surpluses are calculated in a relatively old-fashioned way nowadays," she told an audience of businessmen at the Christian Democratic Union's Economic Council Conference in Berlin. If services and other forms of income are included, she said, "the US runs a big surplus with Europe. And the share of services will only grow." Several German economists have long made similar arguments.
The chancellor also said German direct investment into the US, which is not covered in the current account, was significantly higher than the other way around.
Read more: German economy expands on investment drive
What the figures show
While Merkel did not mention on what studies she based her figures, statistics from the US Department of Commerce show that the US did indeed have a current account surplus with the EU in 2017.
A country's current account measures the difference between how much a country sends and receives in terms of goods, services and "primary income" — certain financial transactions such as interest payments.
Commerce figures show:
- The US had a deficit with the EU in goods. It imported $153 billion (€122 billion) more in goods than it exported.
- It had a surplus with the EU in services and primary income. It transferred $167 billion more in services and primary income to the EU than it received.
- Taken together, the US had a current account surplus of $14 billion.
The top services were in professional and management services, intellectual property, travel and education.
Global trade fiasco
Merkel's remarks came just days after disputes over trade saw the annual Group of Seven (G7) summit end in chaos, as Trump refused to endorse the group's final communique and accused Canadian Prime Minister Justin Trudeau of being "very dishonest" in his condemnation of US tariffs.
Trump has defended his decision to impose steel and aluminum duties on the US partners. The president has also mulled placing punitive tariffs on foreign car imports, a restriction that would particularly affect the German economy.
Merkel admitted Tuesday the current global trade climate was "challenging" but that Europe's prosperity depended on the continent's ability to act with "courage and determination."
amp, dm/sms (Reuters, dpa)