I still haven't seen a single adequate explanation of what the problem is. Trump just keeps saying it isn't fair. Why though?
-
Hey, guest user. Hope you're enjoying NeoGAF! Have you considered registering for an account? Come join us and add your take to the daily discourse.
Trump on trade: "The Germans are bad, very bad"
- Thread starter GAMEPROFF
- Start date
I still haven't seen a single adequate explanation of what the problem is. Trump just keeps saying it isn't fair. Why though?
Germany's constant trade surplus is a problem, nobody disagrees here. But more money for households does not automatically mean more US imports.
Germans like to save money, that's just what they do. People will gladly consume more, but not to a degree that Trump or others want. Besides, solely blaming Germany makes no sense.
The problem is that people believe Germans don't consume more because they don't have the money to consume more. Sure, more money means higher consumption. But it's not as easy as they think. Besides, who is to say Germans would consume more US products anyway?
clockworkinyou
Banned
They're just happy that they feel Trump is right on something. Let them have their victory. Don't bother them to explain to us : (
PdotMichael
Banned
The USA basically must run a trade deficit, it's pretty simple.
Trying to change that would just make China quite happy which will love to have the leading reserve currency in the world and getting basically free money out of it.
Trying to change that would just make China quite happy which will love to have the leading reserve currency in the world and getting basically free money out of it.
There are smarter people than me who have addressed this outside of this forum. Pretty sure Krugman blasted Trump but also took a swipe at the German Surplus, so take a look at his blog. Maybe he gives a decent explanation, or links to one. I apologize for being lazy.
You're right more money for German households does not mean more US imports, but it will certainly lead to more imports on the whole, they'll come from many sources, not just the US. If your boss gave you a raise there's a good chance you'll take the extra money and visit your folks in Greece this summer, or more often than you normally do, or take an extra vacation to Spain or whatever. I know folks like to say that German's like to save, but is it households or industry, the latter most certainly does.
It's not only Trump, it is also often brought up by other European countries (which is actually more understandable, EU and all). It's unfair in that it means Germany can create more jobs while whatever other country we are talking about could potentially even lose jobs if they just keep importing. I mean it's obviously also a matter of quality (or the lack thereof), but it's not entirely unreasonable to make demands here or even put fees on those imports if you think the trade relationship was unfair.
Ah yes the same genius Krugmann who said Greece should leave the euro and just default.
German household spending currently is at a record high. The country is close to full employment. German companies invest heavily (ironically especially in the US). The country is the 2nd fastest growing G7 economy.
What you're advocating for is a massive tax cut which would destroy public finances or lead to cuts in social budgets.
That does not make him German.
Listen, Krugman makes statements I don't agree with, he's no saint, but the poster asked for an explanation and I told him to check the blog of a trade economist. Krugman wasn't the only who advocated for Greece to exit, and it's not like that country is doing any fucking better now.
It's time for German households to get a larger share, especially for labor. How it's transferred, that's for your country/citizens to work out, but it should happen and liberal economists all over the world will tell you the same fucking thing.
Edit: The European Commission thinks it's a problem, German domestic spending not adequate enough. You don't have to cut social programs, hell increasing social spending is one way to transfer money to households. Increase programs, which can free up more money for domestic spending.
TheLaughingStock
Member
The US economy operates below its full potential. A trade deficit impacts output and employment. Therefore, he's ratcheting up his rhetoric to lower the trade deficit.
Yes, for China.
Only parts coming from the US (minuscule) are counted as US exports.
That's why only looking at exports doesn't paint the whole picture.
If you transfer all your production and supply-chain to China your countries export will shrink.
German car makers could do the same, US/Ger deficit would sink, real effect on the situation = 0.
If you would look at profit generated on foreign soil the picture would become totally different and one country would clearly stand out (hint: not germany).
FinaruDensetsu
Member
Well yeah... They make one desirable car, the Corvette.
Maybe make a lot of cars people who aren't just into big American trucks would like and people in other countries would buy them.
They actually do that right now. I bought a new Volkswagen a few months ago and my car seller once told me that was back then in China before getting final adjustments here in germany.
It makes me happy, very happy when Trump says something like this. So Germany is doing something right.
This kind of surplus just indicates that German products are popular and most of the time rightly so because of superior quality standards within Europe.
But if Trump wants to start a trade war, then so be it. I suppose that German companies will just stop investing into the US then. Good luck with that, Donald. Maybe Russia will throw in some Rubles instead.
This kind of surplus just indicates that German products are popular and most of the time rightly so because of superior quality standards within Europe.
But if Trump wants to start a trade war, then so be it. I suppose that German companies will just stop investing into the US then. Good luck with that, Donald. Maybe Russia will throw in some Rubles instead.
I wonder when will he start to picking on Mexico on trade again, since that line doesn't work as we consume a lot of USA stuff.
he obviously didn't write those tweets
PandaPandaPanda
Member
i don't read his twitter often but i've noticed that if it's rambling/words are in all caps, it's usually him
since neither are here, i agree that those werent by him
on top of that, he would also never use the word "read"
From what a device were this Tweets send?
Since the first two tweets aren't an hour apart, you're right! It takes Donny a while to finish his thoughts
kingkaiser
Member
A trade war against Germany would mean a trade war against the whole EU.
That would be like dealing against the 21st century Entente Cordiale all alone.
Good luck with that Donald, Wilhelm 2nd would be so proud of you.
That would be like dealing against the 21st century Entente Cordiale all alone.
Good luck with that Donald, Wilhelm 2nd would be so proud of you.
ClosingADoor
Member
Their budget surplus is not even 1% though. So... what money are they supposed to transfer back to households? It's not like the government is just holding all that money. And if people are saving too much, then well, that is their decision. They probably have it in the bank or in investments, so it gets used either way.
Record high after decades of suppressing labor costs (read: wages)
Germany needs to invest less and consume more, especially EU-wide, and especially needs to drop the austerity bullshit.
My trump-hating credentials are not in discusion, but they're pretty solid anyhow
The other option is increasing wages. Pass more pro-labor laws to strengthen worker bargaining power.
Additionally the Chevrolet brand was taken off the German market two years before that interview. Other cars by GM are sold in Germany, mostly under the Opel brand.
Even if wages increased at an absolutely high pace consume wouldn't increase too much.
What a lot of economists don't understand is that germans don't like to indebt themselves like american or english households do.
In germany debt is something negative you try to avoid as long as possible and households will rather save to buy a house(that's why there are so many people living on rent) instead of being indebted.
Unlike in America most people don't have a credit card and most people enjoy paying in cash(which is why we still don't have Apple Pay).
ClosingADoor
Member
Wonder if there are any studies done to compare how people in different countries spent their bonus. Some large German companies are giving thousands of euros in bonuses to all employees. I'm guessing most of that goes to paying off their mortgage instead of buying more stuff.
Yeah probably. Most people i know generally park their money on a bank account to make money on interest (which is why germans constantly bitch about the ecb).
adamsappel
Member
Isn't a/the barrier for selling US cars in Europe that Europe has stricter emission and mileage standards? It would be inefficient to make separate lines of cars for export, and too expensive to meet those standards for US sales.
I dont think this is a thing, the european market is just to big to be missed out.
Germany has excess savings, excess savings are not always a good thing, especially for a country like Germany. It leads to malinvestment, which we saw throughout Europe. The govt can always institute policies to direct more funds into household consumption, it does not have to be a direct transfer, a couple of posters have mentioned paying higher wages. It's a policy mix that at the end of the day will lead to higher domestic spending which will help neighboring economies. It's not just people, businesses save also, and saving too much can be detrimental, especially to your neighbors. Trumps a fool, but persistent German surpluses are not good, eventually things will reverse, they always do but it would be beneficial to rebalance in a controlled way.
PdotMichael
Banned
Different market preferences - you can't sell the heavy and large American cars in Europe. Cheverolet used to sell not their American cars but their Korean Daewoo counterparts in Europe.
Frankfurter
Member
That's not much of a problem actually. It's more that Europeans tend to not buy, say, pickups. Also gas prices are much higher in Europe, so fuel economy is much more important.
Yeah seeing a big-ass American car always makes me go "Huh!?". I'm always wondering why you'd buy a big-ass truck over here lol.
ClosingADoor
Member
If they have too much money stashed away, making policy to have people spent it is good. But that isn't really what Trump is referring to when talking about this I think. He simply sees the numbers and then thinks he needs to stop German cars from selling in America.
The complaint that Germans are having too much money in the bank is also a bit funny when looking at American companies and their overseas bank accounts though. Something the US is doing little to fix.
Similar threads
- Locked