On Trade, Merkel Joins Trump on the Low Road

After failing to persuade President Donald Trump that punitive tariffs on European imports aren’t a good idea, Chancellor Angela Merkel has apparently decided to fight back by taking a page from his playbook and manipulating facts.

“Trade surpluses are still calculated in a relatively old-fashioned way, based only on goods,” Merkel told a business conference organized by her party on Tuesday. “But if you include services in the trade balance, the U.S. has a big surplus with Europe.”

That sounds like the reverse of Trump’s inaccurate complaint that Europe is running a huge trade surplus with the U.S. thanks to unfair market practices. In fact, the barriers, of the tariff and non-tariff varieties, are pretty evenly aligned, with Europe at a slight advantage. Trump cherry-picks specific imbalances, such as Europe’s higher import duty on cars. Merkel is doing the same, and her statements aren’t necessarily  true, either. 

 The U.S. Census Bureau estimates the U.S.-EU trade balance in both goods and services at $101.2 billion in favor of Europe for 2017 and $30.4 billion in favor of Europe for the first quarter of 2018. There are no equivalent European data yet, though, and official numbers on the two sides of the Atlantic have differed for years. The EU has tended to report lower services exports to the U.S. than U.S. sources. 

To make her point, the chancellor seems to rely on data that more closely track U.S. estimates of the trade relationship than the numbers provided by European Union or German record-keepers. When it comes to services alone, the U.S. Trade Representative put the surplus with the EU at $55 billion in 2016. But Eurostat’s number for that year is starkly different: According to the agency, Europe’s services trade deficit with the U.S. only amounted to 1.3 billion euros ($1.5 billion). That’s not a huge imbalance.

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On Trade, Merkel Joins Trump on the Low Road

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