Angela Merkel accuses US of running trade surplus if trade calculations are updated

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More than a trillion euros in trade

The European Union is the US' largest export market, accounting for about one-fifth of all US exports. Similarly, one-fifth of EU exports go to the United States. EU-US trade in goods and services was €1,069.3 billion in 2017. The EU imported €256.2 billion in goods from the US, and exported €375.8 billion.

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EU trade surplus

The main exports and imports between the EU and US fall into the categories of machinery and vehicles, chemicals and other manufactured goods. Combined, they accounted for 89 percent of EU exports and imports with the US in 2017. In all three categories, as well as food and drink, the EU had a trade surplus. The US had a trade surplus in raw materials and energy.

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Cars, machinery top exports

At €167 billion, machinery and vehicles were the largest EU export category to the US, accounting for 44.4 percent of goods exports. The €111.5 billion in machinery and transport equipment was the largest EU import from the US, accounting for 43.6 percent of imports.

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Small part of trade pie

At the end of May, the Trump administration imposed a 25 percent tariff on EU steel and 10 percent tariff on aluminum. Steel and aluminum exports to the United States were worth €3.58 billion in 2017.

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Retaliatory tariffs

In response, the European Union has developed a list of products it may subject to retaliatory tariffs. These include typical American products like peanut butter, bourbon whiskey, Harley Davidson motorcycles, jeans and orange juice. The exports targeted by the EU are worth about €2.8 billion annually, according to EU officials.

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Services include travel, education

For services, the EU imports amounted to €219.3 billion and exports €218 billion. The top services were in professional and management services, intellectual property, travel and education. About a third of EU-US trade consists of intra-company transfers.

Chancellor Merkel has said trade accounting methods are outdated and need revision. Done differently, figures show the US had a $14 billion surplus rather than $153 billion deficit with the European Union in 2017.

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.

Read more: Juncker promises Trump 'facts' as cold trade war threatens to heat up

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.

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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."

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