US Becomes Germany’s #1 Trade Partner

Flag_of_the_United_States_and_Germany

2015 U.S. Trade in goods with Germany in millions

US Trade with Germany

Exports: $49,946.70

Imports: $124,139.20

Balance: $-74,192.60


 

040315_Trade_Surpluses

The United States has now surpassed France for importing the most goods and services from Germany. Germany and the United States are both apart of the World Trade Organization, European Union, and the Organization for Economic Cooperation and Development. Germany is the 4th largest economy in the world and constitutes 1/5th of the total GDP of the European Union. The last couple years we have seen an increasing trade deficit between the U.K. and Germany where the U.K. has been importing German goods and services at levels that are unprecedented and the U.K. has been exporting less and less goods and services to Germany. Germany currently has a trade surplus that is approximately 6% of GDP where the U.S. has a trade surplus of -3% of GDP. The global financial markets are afraid of Brexit, which is the exit of the U.K. from the European Union through a referendum.  If this occurs it could greatly effect the European Central Bank and banks worldwide. The German economy that exports at a large volume to their trade partners may seem beneficial to Germany, but the European Union as a whole has seen stunted growth because of austerity measures becoming implemented by the European Central Bank. What does this mean to the Eurozone and the United States, and the global economy as a whole?


 

us-praesident-obama-war-zuletzt-im-juni-2013-zu-besuch-in-berlinPresident Obama is to lead the U.S. delegation at German trade show in Hannover Messe, it is the largest U.S. led delegation of government, economic development, and business officials apart of the industrial technology sector. The trade talks will take place April 25th-29th of 2016. Obama wants to resolve the Transatlantic Trade and Investment Partnership(TTIP) with German Chancellor Angela Merkel before his term ends, but many speculate that negotiations will not reach a resolution till at least 2017.


Top 10 German Exports and top German companies in their respective sectors

  1. Vehicles: US$259.4 billion (17.2% of total exports) BMW,VW, Mercedes Benz,Daimler
  2. Machines, engines, pumps: $258.5 billion (17.1%)Siemens
  3. Electronic equipment: $147.9 billion (9.8%) Siemens, E.ON, Bosh, RWE
  4. Pharmaceuticals: $80.1 billion (5.3%)Bayer Healthcare, Phoenix Pharmahandel
  5. Medical, technical equipment: $69.5 billion (4.6%)Siemens, Heraeus, Fresenius
  6. Plastics: $63.3 billion (4.2%) Adidas, Lanxess
  7. Aircraft, spacecraft: $44.1 billion (2.9%)Airbus
  8. Oil: $42.7 billion (2.8%)Wintershall, Marquard & Bahls
  9. Iron or steel products: $33.5 billion (2.2%)ThyssenKrup
  10. Organic chemicals: $30.4 billion (2%) Basf Group, Bayer Group, Linde

The U.S. now being the top destination for German exports is result of the upturn in the U.S. economy and devaluation of the €(Euro). Simon Juncker an accomplished economist at the DIW economic institute stated that, “This is more of a long term trend”, we are seeing unprecedented trends because of the the extremely low prices for energy. Americans now have greater disposable income to spend on goods that are not necessarily manufactured in the U.S., and have turned to Germany’s manufacturers to provide these high-quality goods and services. The expansionary monetary policies implemented by the ECB have expanded foreign demand for goods and services coming from the EU, where France has little to no benefit from trading with Germany from the depreciation of the Euro(€).


 

United States’ citizens have also looked to relocate to Germany for free education that is also offered in English. Over 10,000 U.S. citizens are going to schools in Germany. As student debt rises and federal interest rates soar, why not look to Germany for your education. Germany has some of the most hospitable welfare systems, and these resources are becoming exhausted as more workers retire in Germany. Due to the devaluation of the Euro and the current labor shortage in Germany. Some Germans think that the influx of foreign students may have an adverse effect on German employee rights. Last week German judges expressed resentment toward the EU’s proposal of a TAFTA/TTIP investment court system.We have seen opposition to the new trade talks, for example just last year there was an event where over one hundred thousand German demonstrators in Berlin vehemently opposed a TTIP agreement with their top trading partner the United States.

TTIP

 

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