A Financial Times report today quoted Donald Trump’s top trade advisor Peter Navarro as saying that Germany is using a “grossly undervalued” euro to exploit the US and its EU partners.
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He said that the euro was like an “implicit Deutsche Mark” whose low valuation gave Germany an advantage over its main partners, suggesting that the Trump administration is focusing on currency as part of its tactics on trade ties.
EU Talks "Dead"
Navarro referred to Germany as being a main obstacle to a US trade deal with the EU and is reported to have declared talks with the EU over a Transatlantic Trade and Investment Partnership (TTIP) dead.
“A big obstacle to viewing TTIP as a bilateral deal is Germany, which continues to exploit other countries in the EU as well as the US with an ‘implicit Deutsche Mark’ that is grossly undervalued. The German structural imbalance in trade with the rest of the EU and the US underscores the economic heterogeneity [diversity] within the EU - ergo, this is a multilateral deal in bilateral dress”, he commented in the FT.
ForexLive commentary on trading Trump:
His comments underscore the Trump administration’s willingness to antagonise German Chancellor Angela Merkel and other EU leaders which was apparent when he supported Theresa May during negotiations with the EU over the terms of its exit and called the EU a vehicle for Germany and Nato an obsolete alliance.
In a response to FT questions, Navarro added: “
Brexit
Brexit
Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum. In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019. Active Prime Minister Boris Johnson was elected Prime Minister the following month, who was well-known as a headstrong Brexit supporter. While the United Kingdom was predicted to leave exit the EU by October 31st, 2019, the U.K. Parliament sought out a deadline extension that delayed voting on the new deal. Following Boris Johnson’s reelection, Brexit occurred on January 31st, 2020 at 11 pm Greenwich Mean Time. Brexit Creating Ongoing Issues in with EuropeWhile the United Kingdom is in a transition period following its departure from the EU, the U.K. is negotiating its complete trade relationship with the EU, which is the United Kingdom’s largest trade partner. Terms of this trade agreement must be met by January 1st, 2021.Should terms of this trade agreement take longer than the projected resolution date of January 1st, 2021 then the U.K. must acquire an extension no later than June 1st, 2020. Failure to do so will result in the U.K. is subject to tariff and host rule changes exercised by the E.U. This situation is referred to as the “no-deal” Brexit and should this occur the consequences could result in a significant fallout of the U.K. economy. For the past few years, many banks and lenders operating previously in the UK had been given passporting rights to the European continent. The lingering uncertainty caused by Brexit resulted in many of these lenders relocating their European headquarters within continental Europe.
Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum. In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019. Active Prime Minister Boris Johnson was elected Prime Minister the following month, who was well-known as a headstrong Brexit supporter. While the United Kingdom was predicted to leave exit the EU by October 31st, 2019, the U.K. Parliament sought out a deadline extension that delayed voting on the new deal. Following Boris Johnson’s reelection, Brexit occurred on January 31st, 2020 at 11 pm Greenwich Mean Time. Brexit Creating Ongoing Issues in with EuropeWhile the United Kingdom is in a transition period following its departure from the EU, the U.K. is negotiating its complete trade relationship with the EU, which is the United Kingdom’s largest trade partner. Terms of this trade agreement must be met by January 1st, 2021.Should terms of this trade agreement take longer than the projected resolution date of January 1st, 2021 then the U.K. must acquire an extension no later than June 1st, 2020. Failure to do so will result in the U.K. is subject to tariff and host rule changes exercised by the E.U. This situation is referred to as the “no-deal” Brexit and should this occur the consequences could result in a significant fallout of the U.K. economy. For the past few years, many banks and lenders operating previously in the UK had been given passporting rights to the European continent. The lingering uncertainty caused by Brexit resulted in many of these lenders relocating their European headquarters within continental Europe.
Read this Term killed TTIP on both sides of the Atlantic even before the election of Donald Trump. I personally view TTIP as a multilateral deal with many countries under one ‘roof’.”
Eliminate Unfairness
Navarro confirmed that one of the administration’s trade priorities was unwinding and repatriating the international supply chains on which many US multinational companies rely on.
“The unequal treatment of the US income tax system under biased WTO [World Trade Organisation] rules is a grossly unfair subsidy to foreigners exporting to the US and a backdoor tariff on American exports to the world that kills American jobs and drives American factories offshore,” he said.
Navarro rejected the argument that US consumers would end up paying the cost of such a tax change. It is argued that at least some of the impact on consumers would be absorbed by a one-time appreciation in the dollar which could also impact on US export competitiveness and lead to a widening of the US trade deficit with the world.
Navarro concluded that he was not concerned about the possibility of a stronger dollar and its impact on US exports, but rather “the actual impact America’s trade deficit in goods is having on our rates of economic growth and income growth.”
A Financial Times report today quoted Donald Trump’s top trade advisor Peter Navarro as saying that Germany is using a “grossly undervalued” euro to exploit the US and its EU partners.
To unlock the Asian market, register now for the iFX EXPO in Hong Kong
He said that the euro was like an “implicit Deutsche Mark” whose low valuation gave Germany an advantage over its main partners, suggesting that the Trump administration is focusing on currency as part of its tactics on trade ties.
EU Talks "Dead"
Navarro referred to Germany as being a main obstacle to a US trade deal with the EU and is reported to have declared talks with the EU over a Transatlantic Trade and Investment Partnership (TTIP) dead.
“A big obstacle to viewing TTIP as a bilateral deal is Germany, which continues to exploit other countries in the EU as well as the US with an ‘implicit Deutsche Mark’ that is grossly undervalued. The German structural imbalance in trade with the rest of the EU and the US underscores the economic heterogeneity [diversity] within the EU - ergo, this is a multilateral deal in bilateral dress”, he commented in the FT.
ForexLive commentary on trading Trump:
His comments underscore the Trump administration’s willingness to antagonise German Chancellor Angela Merkel and other EU leaders which was apparent when he supported Theresa May during negotiations with the EU over the terms of its exit and called the EU a vehicle for Germany and Nato an obsolete alliance.
In a response to FT questions, Navarro added: “
Brexit
Brexit
Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum. In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019. Active Prime Minister Boris Johnson was elected Prime Minister the following month, who was well-known as a headstrong Brexit supporter. While the United Kingdom was predicted to leave exit the EU by October 31st, 2019, the U.K. Parliament sought out a deadline extension that delayed voting on the new deal. Following Boris Johnson’s reelection, Brexit occurred on January 31st, 2020 at 11 pm Greenwich Mean Time. Brexit Creating Ongoing Issues in with EuropeWhile the United Kingdom is in a transition period following its departure from the EU, the U.K. is negotiating its complete trade relationship with the EU, which is the United Kingdom’s largest trade partner. Terms of this trade agreement must be met by January 1st, 2021.Should terms of this trade agreement take longer than the projected resolution date of January 1st, 2021 then the U.K. must acquire an extension no later than June 1st, 2020. Failure to do so will result in the U.K. is subject to tariff and host rule changes exercised by the E.U. This situation is referred to as the “no-deal” Brexit and should this occur the consequences could result in a significant fallout of the U.K. economy. For the past few years, many banks and lenders operating previously in the UK had been given passporting rights to the European continent. The lingering uncertainty caused by Brexit resulted in many of these lenders relocating their European headquarters within continental Europe.
Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum. In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019. Active Prime Minister Boris Johnson was elected Prime Minister the following month, who was well-known as a headstrong Brexit supporter. While the United Kingdom was predicted to leave exit the EU by October 31st, 2019, the U.K. Parliament sought out a deadline extension that delayed voting on the new deal. Following Boris Johnson’s reelection, Brexit occurred on January 31st, 2020 at 11 pm Greenwich Mean Time. Brexit Creating Ongoing Issues in with EuropeWhile the United Kingdom is in a transition period following its departure from the EU, the U.K. is negotiating its complete trade relationship with the EU, which is the United Kingdom’s largest trade partner. Terms of this trade agreement must be met by January 1st, 2021.Should terms of this trade agreement take longer than the projected resolution date of January 1st, 2021 then the U.K. must acquire an extension no later than June 1st, 2020. Failure to do so will result in the U.K. is subject to tariff and host rule changes exercised by the E.U. This situation is referred to as the “no-deal” Brexit and should this occur the consequences could result in a significant fallout of the U.K. economy. For the past few years, many banks and lenders operating previously in the UK had been given passporting rights to the European continent. The lingering uncertainty caused by Brexit resulted in many of these lenders relocating their European headquarters within continental Europe.
Read this Term killed TTIP on both sides of the Atlantic even before the election of Donald Trump. I personally view TTIP as a multilateral deal with many countries under one ‘roof’.”
Eliminate Unfairness
Navarro confirmed that one of the administration’s trade priorities was unwinding and repatriating the international supply chains on which many US multinational companies rely on.
“The unequal treatment of the US income tax system under biased WTO [World Trade Organisation] rules is a grossly unfair subsidy to foreigners exporting to the US and a backdoor tariff on American exports to the world that kills American jobs and drives American factories offshore,” he said.
Navarro rejected the argument that US consumers would end up paying the cost of such a tax change. It is argued that at least some of the impact on consumers would be absorbed by a one-time appreciation in the dollar which could also impact on US export competitiveness and lead to a widening of the US trade deficit with the world.
Navarro concluded that he was not concerned about the possibility of a stronger dollar and its impact on US exports, but rather “the actual impact America’s trade deficit in goods is having on our rates of economic growth and income growth.”
