Trump’s Mirror to Germany: A Reflection on Four Years

In the run-up to the 2020 US presidential election, it is time to examine the impact of Trump’s presidency on various countries across the globe. How do different countries look back upon four years of President Trump? In this fifth episode of the Clingendael Spectator series “Four Years Trump: Taking Stock and Looking Forward”, Stefan Fröhlich states that German-American relations are at a low point, but that Trump has also held up a mirror to Germans that accurately reflects their vulnerabilities.

Donald Trump’s sudden announcement of a troop withdrawal from Germany is but the latest step in his ‘America First’ agenda to further alienate the United States from one of its closest allies. Supposedly to punish Berlin for not spending enough on defence (an evergreen of ‘Trumpism’), it is another example of the president’s misreading of the realities of the value of transatlantic relations.1

After four years of Trump, German-American relations are at a low point. According to a recent survey, the US risks “losing” Germany; the German population is now even in doubt whether Washington or Beijing is the more important partner (37 percent is still choosing the US, and 36 percent China).2

Does that mean the end for the German-US relationship, or even the end of transatlanticism? No, for two reasons.

First, Germans have always been among the most negative voices in Europe ever since Trump entered the White House. This can be traced back to Germany’s continued ambivalent relationship with the US and its latent anti-Americanism, especially in Social Democratic circles, and the Left in general. That was also the case under President George W. Bush, only for the pendulum to swing back as soon as Barack Obama came to office.

Second, there has always been a remarkable gap between the public opinion and that of political elites, the latter usually taking broader considerations into account when thinking about the value of the relationship for German security and prosperity.

From the beginning of Trump’s first term, Chancellor Angela Merkel adopted a very pragmatic attitude towards the new government in Washington. On the one hand, it was argued, there is no alternative to the transatlantic relationship as long as the European Union (EU) lacks the willingness to take on key challenges posed by (external) migration, or the security threats emanating from failed-states conflicts on its periphery, not to mention those coming from Russia and (potentially) China.

On the other hand, Merkel was serious when she said that Europe can no longer completely rely on its allies and that it must take its fate into its own hands.3

There is a growing awareness in Berlin that propaganda from both Russia and China aims to drive a wedge between the US and the EU with the single purpose to erode Western self-confidence

Against this background the most realistic scenario for Berlin is to expect the EU to be incrementally heading into the direction of what is called ‘strategic autonomy’.4 At the same time, Germany is keen to rely on political factions in Washington who still do not see an alternative to transatlanticism, provided the EU turns itself into a reliable partner for the US, both in Europe and globally.

Germany’s negative reaction to Trump’s order to withdraw troops illustrates Berlin’s belief that the US-led system of alliances has been the key to American global hegemony. Despite Trump’s outright contempt of his European partners in the beginning of his presidency, Germany believes the alliance system is not beyond repair, and still constitutes a powerful force in global affairs.

Finally, there is a growing awareness in Berlin that propaganda from both Russia and China aims to drive a wedge between the US and the EU with the single purpose to erode Western self-confidence. Still, neither Russia nor China has the ability and desire to fill the void the US has created.

The trade agenda
Immediately after his inauguration, President Trump started blaming China and Germany – as so-called ‘surplus countries’ – for America’s industrial decline.5 Today’s COVID-19 crisis has merely reinforced these accusations, and both countries are now regarded as a scapegoat, and potential targets of US protectionism. Berlin’s reaction to Trump’s criticism was unmistakable.6

First, Germany’s current account surplus is not a global problem, as it is often stated, but must be considered in isolation. Criticism primarily comes from the US and the EU (especially from the European Commission, which considers surpluses of more than 6 percent of GDP to be a threat to long-term economic stability). Since the bulk of German foreign trade is conducted with European countries, Germany’s economic surpluses are mainly a regional matter, and not key to the transatlantic relationship at all.

It is unfair to criticise a country for the competitiveness of its own product

Second, Germany’s surpluses are not the result of its lack of trade openness or growing protectionist measures with which it seeks to protect its markets from imports. On the contrary, Germany’s comparatively high degree of trade openness has become a natural reflex and the key to Germany’s export success.

Moreover, German exporters are doing comparatively better on the world market than other global competitors because they have created a good position on the demand side, especially in emerging markets, by specialising in capital goods, such as machinery and equipment.

Third, German surpluses after all mean that German companies are more successful than others. As Berlin likes to point out, it is unfair to criticise a country for the competitiveness of its own products.

It should be said that Germany has neither been responsible for the low prices of raw materials in recent years (which have temporarily depressed imports), nor for the foreign low exchange rate of the Euro (which has indeed been too low for the German economy, but which remains in the competence of the European Central Bank).

Be that as it may, Berlin has shown remarkable restraint during Trump’s first four years in office. Germany has refrained from escalating matters by taking disproportionate protectionist policies of its own. Instead, Berlin put its hopes on keeping the rules-based global trading system open as long as possible, realising that Germany’s prosperity critically depends on free, global economic exchange.

Berlin never forgets that economic ties between the US and Germany/Europe are closer than any other bilateral relationship. The services sector and Foreign Direct Investment (FDI) are particularly relevant here, making the US market by far the most important to Europe.7 The US and the EU are each other’s largest services market, providing the geo-economic basis on which services companies have been able to build their global competitiveness.8

The truth is that Europe has spent too little on defence

Berlin knows all too well that a trade war with the US would be painful for another reason: the US remains the central node in the globalisation network. The US controls (or hosts) more than 50 percent of the world’s cross-border bandwidth9 , venture capital, phone-operating systems, top universities, and fund-management assets. Almost 90 percent of currency trades use the US dollar.

In sum, Germany – and Europe in general – realises it will not be able yet to set economic, financial, and trade rules, and that it should focus on continued access to US markets and fair treatment alongside US firms.

The security agenda
The reason for Germany’s pragmatism on trade is given in by the fact that the transatlantic bond cannot be reduced to a mere economic dimension. How Germany – and the EU – positions itself in the current trade conflict with the US, has major ramifications for Europe’s overall security.

President Trump intentionally links trade and European defence expenditures, and there is no doubt that Europe, and Germany in particular, has to deliver on this front. Germany cannot deny that the best way to guarantee Europe’s security is to remain a useful ally within the NATO-framework, and that Washington has legitimate concerns about Europe’s complacency regarding military burden sharing since the end of the Cold War.

The truth is that Europe has spent too little on defence, and urgently needs to improve its rapid response units and boost joint funding for military operations. The current German government realises that spending more on defence will kill two birds with one stone.

Firstly, it will help to construct a more autonomous European defence identity which can – if necessary – act without the hitherto automatic American security guarantee. Secondly, it will contribute to military deterrence (conventional and nuclear) and to stabilising Europe’s periphery and maritime security on global trade routes.                      

There is no doubt that since 2014 several factors – ranging from Russia’s annexation of Crimea and Brexit to ongoing civil wars in the MENA region and President Trump’s ‘America First’ approach – have strengthened Germany’s commitment to Europe’s security and defence policy.

The 2016 European Global Strategy underlines the EU’s ambition to become a more autonomous security player. The EU is now committed to take more independent action in its own neighbourhood, going far beyond crisis management.

New defence initiatives such as Permanent Structured Cooperation (PESCO) and the European Defence Fund (EDF), though still nascent, could bring about the desired change. PESCO operates as a platform for groups of member states to cooperate on defence capability projects. Particularly when the so-called ‘core within the core’ takes the lead, rallying those member states that are really willing to bundle their capabilities.10

Germany’s leading coalition party, the Christian Democrats, is supportive of all the EU’s defence initiatives, whereas the Social Democrats seem to fall back into old arguments about German security and defence policy.11 Moreover, there is agreement in Germany that Paris and Berlin should once again take the lead to rekindle European defence, since they have the scale to do so.12

Trump’s harsh criticism of Germany’s alleged complacency on defence is unwarranted

Berlin is also convinced by the idea that the EDF has the potential to spur collaboration on the development and acquisition of new defence capabilities between EU member states. Germany also likes to point out that NATO defence spending across European Allies and Canada increased by 4.6 percent (in real terms) in 2019, making this the fifth consecutive year of growth in defence spending.

For example, German defence spending increased by 10 percent to 49.3 billion US dollars, which is the largest defence budget increase among the world's top 15 states.13 By the end of 2020, these allies will have invested 130 billion US dollars more since Trump took up office in 2016.14

These figures support Berlin’s conclusion that Trump’s harsh criticism of Germany’s alleged complacency on defence is unwarranted. Indeed, the US should welcome the prospect of a stronger EU security and defence role instead of expressing concerns, as Trump continues to do. In the end, Trump’s opposition to a more autonomous EU defence role has more to do with restrictions on these rules that prevent non-EU countries from participating in new EU defence projects.15

Nevertheless, Germany remains aware that the EU still has a long way to go and is not in a position yet to pursue complete autonomy in a way that fully assuages its member states’ security concerns.

Much remains to be done to achieve strategic autonomy, ranging from improving the EU’s decision-making structures to acquiring civilian and operational capabilities to carry out these decisions, and developing the necessary capabilities through a competitive high-tech European defence industrial base (from which the US should not be excluded).

Today, the EU has far too many diverse military systems, resulting in far too little military capability for their money. For example, Poland and Germany combined spent more on defence than Russia.16

All this will require flexibility and a new pragmatism for EU member states keen to develop Europe’s strategic autonomy. Still, until this is achieved there is no alternative to the transatlantic relationship as the basis for European defence, and US-European cooperation, with or without Trump.

It is fair to say that the Trump administration has indeed “stripped from the German-American relationship much of the nostalgia” of the past.17 Still, there is hope in Berlin that, regardless who will win the upcoming US presidential election, this partnership has the potential to form a vital pillar for any US president.

After all, the truth also is that Trump, like no other president before him, has “held up a mirror to Europe (and Germans) that accurately reflect (their) vulnerabilities”.18  

All authors of this Clingendael Spectator series will grade the impact of the Trump administration on the relation with their country in the scorecard below.

Loading...

• 1John Williams, ‘The United States needs German Bases more than Germany does’, Foreign Policy, 9 June 2020.
• 2Noah Barkin, ‘In the post-pandemic Cold War, America is losing Europe’, Foreign Policy, 19 May 2020.
• 3See: ‘Angela Merkel: Europe must take “our fate” into own hands’, Politico, 28 May 2017.
• 4European External Action Service, ‘A Global Strategy for European Union’s Foreign and Security Policy’, Brussels, June 2016.
• 5A trade surplus is an economic measure of a positive balance of trade, where a country's exports exceed its imports. The German trade surplus with the US was some 47 billion euros last year.
• 6See the German current account in the context of US-German trade, German Ministry of Finance, Berlin, 9 May 2018.
• 7Germany’s trade surplus is reversed in the services sector, where the Americans have a significant surplus (over Germany). That surplus, however, is offset by the US slightly stronger hand in exporting services. According to Eurostat, the EU in 2016 imported 219 billion euros of American services, while 218 billion euros worth of services went the other way, marking Europe's first services deficit with the US in five years.
• 8Daniel Hamilton, ‘It’s still the Atlantic, stupid!’, Wirtschaftswoche, 10 April 2020.
• 9Bandwidth is measured as the amount of data that can be transferred from one point to another within a network in a specific amount of time.
• 10Sven Biscop, ‘European Defence and PESCO: Don’t waste the chance’, European Integration and Differentiation for Effectiveness and Accountability, Policy Papers, 1, 5 May 2020.
• 11International Institute for Strategic Studies, ‘German Foreign and Security Policy after Merkel’, November 2019, Vol. 25, Comment 34.
• 12 ‘Merkel and Macron sign Treaty of Aachen to revive EU’, Deutsche Welle, 22 January 2019.
• 13According to SIPRI, ‘Trends in World Military Expenditure, 2019’, Fact Sheet, April 2020.
• 14NATO, ‘NATO Secretary General announces increased defence spending by Allies’, 29 November 2019.
• 15 ‘US warns against European Joint Military Project’, Financial Times, 14 May 2019.
• 16Ian Bond, ‘Trump sounds the retreat: Can European defence advance?’, Centre for European Reform, 26 June 2020.
• 17Elizabeth Caruth, Eric Langenbacher et. al. eds., ‘Enduring Partnership. Recommendation to the next US Administration for the German-American relationship’, American Institute for Contemporary German Studies, Washington, 2020.
• 18Constanze Stelzenmüller, ‘Hostile Ally. The Trump challenge and Europe’s inadequate response’, The Brookings Institution, Washington, August 2019.