On Tuesday, the Washington Examiner interviewed Germany's ambassador to the United States, Peter Wittig. Yesterday, we considered Germany's climate change and defense spending quarrels with President Trump. Today, we explore the trading relationship between the world's largest economy (the U.S.) and Europe's largest (Germany). My perception of the ambassador's key points are in bold.
Washington Examiner: What do you think President Trump meant when he recently described Germany as ‘very bad' in its trading practices?
Wittig: I don't know what he meant. I think he referred to the many German cars that he sees on American roads. But those are cars that American consumers bought, apparently fully aware that they had a choice. And they went for the German cars. But German foreign direct investment is very significant in the U.S. BMW is the biggest exporter in the American automotive industry because of its extremely efficient and large plant in South Carolina. German companies are making products here that are then being exported outside the U.S.
- Analysis: There's an obvious German impatience here. While many Americans might enjoy Trump's fire-from-the-hip mentality, the Germans do not. It offends their stoic sensibilities. The focal German concern is more basic: They simply do not understand why Trump apparently opposes U.S.-German free trade. From Berlin's perspective, in that both nations have high-value goods and services economies, free trade has no negative impact on U.S. jobs. They see the relationship as inherently fair. When it comes to trade, Trump and Merkel are speaking in very different languages.
Washington Examiner: Can you understand why some Americans complain that ‘our allies talk about international order but the U.S. has to pay for the burden in military force and financial costs?'
Wittig: I can understand. I can understand that very well. There are two aspects here. First, NATO contributions. Second, the benefits of international trade. I understand that Americans feel that the Europeans should pay more. And I think we will agree. You will hear no other rhetoric coming from Germany and other countries. We have to do more for our defense. Let's not forget, there was a pivotal moment where a lot of illusions were destroyed. And that moment was when Russia redrew the map of Europe in 2014. Before that, everybody was encouraged to enjoy a peace dividend in Europe. And a lot of militaries drew down. That was the common sense. That has changed. From 2014 forwards, we became aware that Europe needs to be in better shape to look after its own defense affairs. So there's no disagreement here. It's more about the methods and the time frame of how we go about raising our defense expenditures.
The second aspect, as I said, is trade. Here I also understand that many people supported President Trump because they feel that they have lost out on free trade. And it's true, while we believe that free trade in the end is a win-win game, there are losers. And I understand that their needs and fears must be addressed. But we strongly believe that protectionism is not a viable answer. That it will actually exacerbate hardship. And if we get into a spiral of protectionism, it will be a lose-lose game.
- Analysis: The ambassador's comments highlight two German objectives. First, Germany wants to rebuke Trump's criticism that its failure to spend more on defense has been a long-term problem. Germany's argument is essentially 'Everyone in Europe cut defense spending, so don't just blame us.' The strategy is designed to dilute Trump's claims that Germany owes back payments to NATO. However, in Trump's favor here is the fact that German defense cuts have been more significant than those of other NATO states such as France. Second, on free trade, Germany wants to retain its access to lucrative U.S. markets. But by dangling the stick of a trade war, Germany is warning that its American-based firms might be forced to cut jobs if Trump introduces tariffs on German exports of the parts those firms use to assemble vehicles in the U.S.
Washington Examiner: Germany has received plaudits by offering apprenticeships to high school students as an alternative to college degrees. Is this a program Chancellor Merkel has raised with President Trump, and do you believe it could be replicated in the United States?
Wittig: Yes, the two leaders talked about that during a recent roundtable at the White House. They had six CEOs, three from Germany, three from the United States. And each CEO brought an apprentice. President Trump was interested to learn more about that program whereby apprentices learn on the job while also learning skills from classroom educations in community colleges. This is one of the recipes to retain strong manufacturing sectors in our economies. And now the German and U.S. companies present at the meeting are working on a report for President Trump and Chancellor Merkel on how this system might work for the U.S. manufacturing sector.
- Analysis: This a core component of the German government's effort to maintain relations with Trump. They know Trump doesn't like them, and they know that he knows they don't like him. So where areas of agreement (however small) are possible, Germany will push those agendas. Germany's apprentice system is a natural fit. It is specifically designed to ameliorate blue-collar unemployment of the kind that Trump promised to address in the 2016 election. And it has shown striking success - especially in boosting youth employment rates.
Conclusion: Germany doesn't want a trade war, but won't accept U.S. tariffs without a response.