While U.S. President Donald Trump seems to have made his peace on trade issues with China, Peter Navarro, his chief adviser in trade matters, has zeroed in on Germany. The Germans use the weak euro to exploit their trading partners, he said. Mr. Navarro is wrong. The excessive German current account surplus is not the result of German policy but a reflection of the malfunctioning of the European Monetary Union.
Last year, Germany's current account surplus amounted to $286 billion. The surplus of the euro area even approached $400 billion, almost as high as the U.S. current account deficit of $481 billion. Against this, the current account surpluses of China and Japan of about $200 billion and $183 billion, respectively, appear to be of lesser importance. The monetary policy of the European Central Bank has been key for the emergence of the massive current account surplus of Germany and the eurozone.