While Europe seems to be plagued with political and economic uncertainty, there is one country that appears completely unfazed: Germany. Recent reports have shown that their economy is doing better than ever, and for many it is an unexpected surprise. For those who have followed Trump’s economic plans, though, the German economy is an obvious example of why his narrative is important. Let’s break down what is going right in Germany and how it can be applied to improve things here at home.
Exports
In the first two months of 2017, Germany reported a 7-percent increase in exports. This represents a 201.2 billion euro boost to Germany’s economy, but that isn’t the whole story. On the back of the export boom, domestic consumption is up an additional 1.9 percent.
To build a little context, these numbers are very close to some of Trump’s quarterly goals for the U.S. economy, but Germany hit them in half the time. What makes this more amazing is that the boom has happened in the wake of unprecedented turmoil within the EU. How did it happen? In the wake of a declining Chinese economy, many international partners have turned toward the trusted quality of “made in Germany.”
The real story comes down to Germany’s trade partners. Exports are up across the board, but Germany’s two biggest trade partners, the U.S. and EU, have contributed minimally to the growth. Instead, Iran, Africa and Mexico have led the pack with India and Japan not far behind.
This dynamic shift shows that higher priced, quality goods can fill the trade vacuum that is currently being produced by China. If the U.S. were able to follow suit with similar numbers, we would see a GDP increase in the trillions of dollars.
Trump and Trade
This is exactly in line with what Trump has been saying about trade all along. Germany has the largest economy in Europe and the fifth largest economy in the world, and yet they do not suffer from a net trade deficit. Exports consistently lead imports, and when exports rise, imports follow suit.
This healthy relationship is better for employment rates, consumer confidence, investor confidence, national debt and virtually every other major component of a national economy. While members of the far left continue to push the lie that America’s trade deficits are a good thing, they are forced to completely ignore the numerical proof coming from Germany.
Trump isn’t just right about America needing to fix trade deficits. He’s also correct about how to make it happen. In the face of his pressure, China has backed away from many of its most flagrant trade policies, and this has further opened the door for other major producers to compete more fairly.
In addition, Germany favors from unique protectionist trade policies within the EU. As the dominant force within the alliance, Germany has been able to leverage a number of policies that benefit their production and ability to export. With that extra reliability, increased opportunities around the globe are ultimately the cherry on top of a stable, export-based economy.
Bringing this back to the U.S., our country is currently in an opposite position. Bad policies tied to NAFTA, TPP and other agreements prevent the U.S. from utilizing any protectionism that could stabilize exports. Without that base, we continue to miss opportunities the likes of which are bringing so much money to Germany.
Fortunately, Trump has already opened the doors to revisit a number of these agreements, and within his first term he can likely correct the most egregious errors.
Learning Lessons
In only 100 days, Trump significantly shifted the global balance of power and has largely mended our relationship with China. If he can continue his progress, a fair-playing China opens a number of doors for U.S. production and export. While completely eliminating our trade deficits is a large task, Trump is well on his way to pushing those numbers into better positions.
More than tax reform, healthcare or infrastructure spending, this is the battle that will enable him to keep his promises in regards to the U.S. economy, and it is the key to a successful presidency. Rest assured. Trump and his team are aware of these lessons and they will be a major component of his next round of negotiations with Congress.
~ American Liberty Report
