U.S. Markets

Germany's trade surplus with U.S. is 'win-win' situation: economy minister

WASHINGTON (Reuters) - Germany’s trade surplus with the United States is beneficial to both countries given that German machinery exported to the world’s largest economy is used in manufacturing there, visiting Economy Minister Brigitte Zypries said on Tuesday.

German Economy Minister Brigitte Zypries addresses a news conference to introduce the government's economic spring outlook in Berlin, Germany, April 26, 2017. REUTERS/Fabrizio Bensch

Her comments came ahead of meetings over the next two days with U.S. lawmakers including Republican House Speaker Paul Ryan, the new U.S. Trade Representative Robert Lighthizer and U.S. Commerce Secretary Wilbur Ross.

Ross and other Trump administration officials have complained about Germany’s persistent trade surpluses with the United States.

White House trade and industrial policy adviser Peter Navarro has accused Germany of exploiting a “grossly undervalued” euro to take advantage of the United States and other trading partners.

“The German trade surplus is above all to do with machinery and plants which the Americans buy in order to rebuild their economy,” Zypries told reporters. “The trade surplus is reversed in the services sector, where the Americans have a significant surplus (over Germany).”

She added: “But naturally the Americans have to export more. Yet despite the trade surplus, it’s still a win-win situation because the Americans are benefiting from this because they can manufacture products.”

The United States had a $65 billion goods trade deficit with Germany in 2016, the third-largest negative balance after a $347 billion deficit with China and a $69 billion shortfall with Japan, according to data from the U.S. Census Bureau.

Data from Germany’s Federal Statistics Office on Monday showed that exports to the United States jumped 8 percent on the year in the first quarter, signaling that trade is flourishing despite U.S. President Donald Trump’s protectionist rhetoric.

The surplus on the German side with the United States swelled to nearly 14 billion euros in the first quarter, the biggest bilateral surplus Germany has with any other country.

In 2016, Germany’s overall trade surplus hit a record high $282.5 billion.

The wider current account surplus, which measures the flow of goods, services and investments into and out of the country, rose to an all-time high of 261.4 billion euros ($293 billion), Bundesbank data showed.

Germany says its high current account surplus is down to the competitiveness of the economy, over which the government has no influence.

The government expects the current account surplus, which stood at 8.3 percent of output in 2016, to fall to 8 percent by 2018.

($1 = 0.8930 euros)

Reporting by David Lawder; Writing by Joseph Nasr in Berlin; Editing by Hugh Lawson