President Trump and the German car imbroglio
"Free Trade" – my assemblage currently featured at the Barrett Art Gallery in Santa Monica.
With the usual gross exaggeration, the media have been reporting that President Trump told European Commission president Jean-Claude Juncker and E.U. Council president Donald Tusk that "the Germans are bad, very bad" for making and selling lots of cars, contributing to their trade surplus, due to all their exports.
Juncker said it never happened and the conversation was about Germany's trade surplus and it was quite civilized. When you've got an arrogant, supercilious, disdainful European Union official such as him defending Trump, you know he must be telling the truth. Via Google Translate, the quote disavowing the media claims is here in Der Spiegel:
Trump had in no way been aggressively put forward. "'Bad' does not mean evil – bad enough," said Juncker. The atmosphere was constructive. "He did not say the Germans behave badly. He said we have a problem," said Juncker.
Still, there's a bit of an argument worth looking at, given the issue at hand. Trump is criticizing the Germans for their cutting-edge industry selling first-rate cars? How could that be bad? Or a problem? Shouldn't every nation do what it does best? Some nations produce the world's best hoteliers, others produce the world's finest agricultural products, still others produce the world's best chess players and computer programmers. Germans do precision tools and cars. The metalworking industry has been a German area of excellence since the rise of Nuremberg, in Bavaria (where the cars are now made), on a major trade route to Italy. Albrecht Durer, the greatest painter Germany ever produced, was the son of a Nuremberg metalworker in the 15th century, and his life and work were intimately connected with the commercial rise of this city, showing that great art arises from great commercial prosperity. The city itself fell into decline when wars took over. But Bavaria remained Germany's industrial center.
This brings me to my real point. They're Germans. What do Germans do when they aren't busily cranking out cars? It's either Germans making and selling cars, or else they go Nazi. Germany has a hideous record of military aggression when it is not kept busy with commercial pursuits. Is it a really good thing to tell Germans not to make cars anymore?
And to address the trade surplus issue that comes of it, it's worth noting that the lines are not as clear as the statistics suggest. Trade is a complex thing, which is why some of the best free-market economists say deficits don't matter. Germany is one of America's largest foreign investors, with $208 billion in investments here, employing 620,000 American workers. They locally source when they produce their cars here because it's the most cost-effective way to do it, visiting German auto executives told me a few years ago. So when Germans build cars for the German market, they like to use Romanian factories because they are closest to the spare parts makers around the region, and this cuts inefficiencies and transport costs. Same thing with the U.S. BMW cars sold in the U.S. assembled at plants in South Carolina, and Mercedes-Benzes sold in the U.S. made in Alabama. (Volkswagen is now mostly in Mexico, but that keeps the illegals employed in their home country.) Japan, too, locally sources its production, with Toyota's operations in Kentucky and Texas, and Nissan's in Tennessee and Mississippi.
Juncker pointed out that the argument Trump was making was directed at Germany but insisted there was no going to Germany directly. Any dealings with Germany would have to be done through the E.U. which makes no distinction between countries.
I was making clear that the U.S. cannot compare their trade situation with individual member states of the European Union. They have to compare their performances with the global performances of the European Union and I made it clear that the commission is charged with trade issues and not the member states.
That may be what Trump really meant to get at, and he is likely right that bilateral agreements based on individual countries' particulars is a better way to go in negotiating better treaty deals, which seems to be what he wants with Germany. There's no sense applying the same muscle to Greece as is required in a deal with Germany – and that is where Juncker slides into unreality.
In any case, it's an unfortunate thing that car-making is what Germany is being criticized for. There are so many things the Germans need to be blasted for – their laziness on defense, their kowtowing to the gamier elements of the Middle East, their open-borders migrant policy, their miserable socialist taxes that keep their birthrate down, and their intrusive government structure that discourages religion and family formation, in addition to their disgusting affinity for the European Union. But car-making isn't what makes Germany "bad" or a problem. Juncker pretty well explained that the E.U. would be a roadblock toward any adjustment of trade terms with Germany. That's where the real problem is, and it will likely be a chronic one until the European Union breaks up. It really isn't German cars.