During the past decade, macroeconomic imbalances have moved to the fore of international economic policy debates. Global events and developments, such as China's integration into the world economy, the 2008 financial crisis, and the Eurozone crisis, have created, and in some cases, compounded longstanding trade and investment asymmetries around the world. These imbalances have no single cause, but are fostered and magnified by the competitiveness of a country's industries, domestic demand, corporate investment decisions, and tax and monetary policy, among other factors. In recent years, the widening gaps in countries' trade relationships have become highly politicized, prompting policymakers to respond with measures ranging from formalized monitoring to punitive tariffs.
Perhaps the greatest of these imbalances is the wide gap between the current accounts of the United States and Germany. Although neither Germany's 287 billion dollars surplus nor the United States' 124 billion dollars deficit is the direct cause of the other, these current accounts represent the global poles of macroeconomic imbalances. German leaders attribute their country's surplus primarily to the competitiveness of its manufacturing sector, domestic saving rates, and exogenous factors such as European monetary policy and the value of the euro, the currency that Germany shares with 18 other member states of the European Union. U.S. policymakers, on the other hand, have been critical of Germany's current account surplus for nearly two decades, and contend that Germans could reduce it – to the benefit of the Eurozone and the global economy – through domestic reforms and investment. American censure is now more pronounced than ever under President Donald Trump, who has characterized the U.S.-Germany economic relationship as unfair and has called on his counterparts to take concrete steps toward levelling the playing field.
Our experts Katharina Gnath and Thieß Petersen and Michael McKeon from Bertelsmann Foundation in Washington have taken a closer look at the anatomy of Germany's current account surplus and the political debate on its origins and remedies. The full text can be downloaded here.