Episode 16: Renewal or Reversal in the Transatlantic Trade Relationship
The trade relationship between the United States and the European Union has been called into question during the Trump administration, despite research showing that U.S. trade with the EU is, on the whole, balanced. Why is that contrary to the intuitive understanding of many Americans? One factor is that the trade relationship is not only about trade in goods; it is also about trade in services. In services, the U.S. economy has a comparative advantage. In fact, overall in 2018, the U.S. ran a current account surplus with the EU of $14 billion—a surplus that has been going on since 2009. The economic relationship is essentially balanced.
There is also the question of singling out Germany—which is problematic because Germany is part of the European single market. In looking at U.S.-German statistics, there is essentially no services trade in the bilateral relations because it’s all in Germany’s trade relationship with Ireland, within the EU, where many U.S. companies base their subsidiaries. In short, we cannot understand transatlantic trade without looking at the entire trade relationship.
On this episode of The Zeitgeist, Jeff Rathke and Peter Rashish speak with Professor Gabriel Felbermayr, one of Germany’s leading trade economists whose contributions to the transatlantic debate on trade deficits have gained wide attention.
Other episodes in the Allianz Geoeconomics Speaker Series
Jeff Rathke, President, AICGS
Prof. Felbermayr also spoke at AICGS about “The United States, Germany, and Global Trade: Renewal or Reversal?” as part of our Geoeconomics Speaker Series, kindly supported by Allianz.