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German current account surplus raises protectionist risk

Euro weakness and underinvestment could spur trade backlash

| Japan

US President Donald Trump has brought trade into the center of a global debate. Almost every country with a significant current account surplus with the U.S., including Japan, has been criticized by the new administration.

Germany is no exception. The heart of U.S. complaints against Germany is that it runs too large a current account surplus and is unfairly competitive, as its currency is the euro, the value of which is weighed down by less competitive economies than Germany. The rebuttal to this is that while the level of the euro may be too weak for Germany, it is too strong for the weaker euro members, thereby offsetting its impact on the U.S.

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