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The U.S. trade deficit with China was declining till the coronavirus hit in February. Now it is back on the way up, a warning signal for the Trump administration as it seeks to stop sending American wealth out of the country in an utterly disproportionate way of $346 billion in just 2019 after taking action on tariffs and renegotiating trade agreements.  Imports grew 11% in July to $231 billion. While exports increased but not as much by 8.1% to $168 billion in July, still well below February/s $209 billion. That leaves a trade gap of $63 billion. This is the largest trade deficit since July 2008. The U.S. trade deficit is a major issue and is watched carefully as the Trump administration sets a goal of rebalancing world trade so that the U.S. no longer runs such large trade deficits with China, and Germany, and does not shift wealth overseas. The U.S. trade deficit with China in 2019 was $346 billion, with Japan and Germany it is much smaller close to $70 billion for each country. The Trump administration goal is to all out reduce this deficit through trade agreements and other actions that stop the current outflow of U.S. wealth overseas by $1 billion a day to just one country. For this it seek a level playing field which means other countries have to face tariffs if they unfairly subsidize their industries or violate labor rights for unfair competition, or in other ways seek to unfairly gain an advantage over the U.S. including through transfer of technologies from the U.S. ...

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Japan and the European Union announce a new trade agreement, in a response to the protectionist tone of the Trump administration in the U.S. The deal is announced at the time of G-20 meetings in Hamburg, Germany. The deal removes the 10% duty on Japanese car imports to the EU, and removes barriers to European automakers in Japan. Experts say the deal comes at a time when the European Union wanted to come up with a response to Brexit and Trump style protectionist sentiment. European automakers say they need assurances that they will have better access to the Japanese market.

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Click on Original Article for Images of ten old towns in Germany most on UNESCO World Heritage. The most well known is Heidelberg on the Neckar river with its old town, castle and old bridge. Then there are the Hanseatic League trading towns of Lubeck and Wismar both near the Baltic Sea. In Wismar with access to the Baltic Sea its old town and three cathedrals. Lubeck surrounded by two branches of the Trave river like an island. In the Middle Ages trade made Lubeck rich and there are many buildings from that period. Then there is Rothenberg in Bavaria with its walkable defensive wall and medieval town largely preserved with timber framed houses. Red brick or clay and wood framed houses in colorful designs form part of all these towns.

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German chancellor Merkel imposes a partial lockdown in Germany starting November 2. This is followed by an announcement of a lockdown across France by president Macron. On October 28 German daily cases went above 14,000. Only 25% of intensive care beds are now available, creating a very serious situation. Meetings in public will be restricted to just two households of up to 10 people total. No crowds at sports events. Restaurants and bars will close except for take away. Schools and kindergartens will remain open. Church services and protests will be allowed to continue. Shops will remain open with one customer for every 10 square meters or 108 square feet. Merkel called it a "very serious situation," and said "we must act now to avoid an acute national health emergency." She told Germans the number of people in intensive care units has doubled in last 10 days, and in many areas it was no longer possible to track and trace infection chains. In 75% of the cases the source of infection is unknown. People are encouraged to work from home and companies encouraged to make this happen. Companies with less than 50 employees and self-employed will get support from the government with  about 75%% of the income. Companies, institutions and clubs will also get federal aid. About $10 billion euros are set aside for this aid. ...

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The US president tells the King it was special that all members of Congress stood up for a standing ovation many times- something that in recent years rarely happens. The King "has shown his class" in the last 24 hours says BBC, it is now up to Starmer and the British government, DJT and the Americans to make it count. Notable DJT sharing that the King agreed with him that Iran should not have a nuclear weapon. The King also talked about the NATO alliance and its role in keeping the peace for 80 years in the world. In the King's words-  "the international rules that have allowed us to trade and have kept power in balance for 80 years." Adding that the US should not go it alone- "The challenges we face are too great for any one nation to bear alone." However the King is only doing what his is role as monarch to present British interests, and it is important to recall that Britain's interests were once colonial interests around the world, that opposition to these colonial interests led to the Declaration of Independence by Jefferson and Washington in 1776. And caution in Washington's advice to America in Annual messages when it comes to these Empires. Right after 1945 when NATO was created- as it was throughout its Empire in Asia  in 1750-1950- Britain opposed Russia and was the most vocal opponent of Soviet Russia in 1950's and saw NATO in this mission. Times have changed with the emergence of Russia after 1990, China in 1950 and again in 1990's, and America as a world power is best following Washington's advice not to get involved in or inherit the British anti-Russian attitude as it has interests in the Western hemisphere and around the world that require cooperation with other world powers such as Russia, China, India, and Germany to create a peaceful world  and not the kind we have today that puts Russia and China on the wrong side just for opposition, as no powers have any interest in drug and people trafficking in the western hemisphere form places like Mexico and Venezuela, or creating small wars in other parts of the world. A situation NATO as seen by Britain in 1950 as Anti-Russian creates for the US- Lord Hastings Ismay first Secretary General of NATO set British goal for NATO (not the US interests or consistent with George Washington's advice to distance from) in 1949 as "Keep the Russian Out, the US Involved, and the Germans Down." ...

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Peter Navarro who has advised the DJT administration on world trade says even when there is no war the perceived risk from the narrow straits at Hormuz and the threats posed by militant groups financed by Iran had led to a premium being baked into oil prices. Navarro says on the Iran Premium (perceived threat risk premium) thatis is about $15 in oil prices. That it reduces growth in global output by 0.4% or $10 trillion over 25 years or $4 trillion over 10 years. As this perceived risk comes down oil prices will come down even further - even into the $50-$60 per barrel range, says Navarro. He cites different economic studies that show even in normal times the ballistic missiles and militant threats posed add up to $15 premium in oil prices to reflect this risk. What this means is higher oil prices and lower growth across the world- in poorer countries and in the US and Europe as a result of this. The current war he says gives the opportunity to reduce or remove this premium paid for perceived risk. The loss in global output he cites is about $450 billion a year adding upto $4 trillion in a decade and over 25 years about $10 trillion. Confronting the threat is not just a matter of national security, it also means this drag on growth on poor and better off countries from Sri Lanka, Nepal, India, Bangladesh, Pakistan to UK, Spain, Germany, and Italy, countries that can be so much better off with much of that $10 trillion tax or burden on world economies removed. ...

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Eurozone GDP growth is 0.4% in 2nd quarter 2025 after 2.3% growth in 1st quarter. The eurozone economy is expected to do better in the second half after the uncertainty in trade is removed with the new US-EU Trade Agreement. Unemployment is at 6.3% in May 2025 historic low in eurozone, and inflation is at 2% in June 2025. Lower inflation has increased the buying power of consumers. Future growth could come from consumer spending and from the huge investments the German government plans to make in infrastructure and transport, digital, other fields to revitalize it's economy.

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The trade agreement with Australia starts a process of taking India's exports far beyond the current figure of $400 billion and creating the jobs that come with it. It will double bilateral trade over 5 years to take it to $50 billion. This also shows the wisdom of India not joining the Comprehensive Economic Partnership pushed by president Obama.

The natural ties within the English speaking peoples and the common historical ties within the Commonwealth of Nations that include Australia, Canada, Britain, the Gulf Nations, and South East Asia provide a natural trade and economic region for India.  Next planned are trade agreements with Canada and Britain, and an effort to bring all the six nations in the Gulf Cooperation Council into and Economic Partnership with India, An agreement was also signed with the United Arab Emirates. Very important is a trade agreement with Germany and the European Union for close economic integration with Europe.

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The Dutch parliament approves a free trade area with Ukraine. Netherlands was the last country to approve this agreement. Populists of eusoskeptic views won a referendum in April 2016 leading to the agreement passed by the other 27 countries of the EU being modified to accomodate the euroskeptics- who pushed the view of Ukraine as another corrupt country that Netherlands tax payers would have to support. The agreement for a free trade area for EU and Ukraine itself was a result of the popular sentiment in Kiev and western Ukraine in favor of closer ties to the European Union, that led to protests in 2013-2014 and the election of pro-EU Petroshenko as president. Russia opposed the move, leading to the support of a Russia rebel movement in the eastern part of Ukraine. The Dutch elections of 2017 led to Dutch voters supporting prime minister Rutte's effort to support the European Union in helping Ukraine with economic ties. This puts Netherlands back into the core EU nations such as France, Germany, Spain and Italy, that back Ukraine and oppose Russian moves. ...

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German exports to Russia are growing at a rate of 25% for the first quarter of 2008, according to Mangold of the Ost-Ausschuss, a group promoting trade with Russia, even though it is only 3% of all German exports. Russia- Germany trade has reached 57 billion euros for 2007. German exports to Russia are vital to the continued growth of the small and middle sized companies in Germany. About 4600 of these companies operate in Russia today. These companies produce chemicals, autos and machine tools. The promotion of this trade was the focus ofa conference in Dresden last month with top level officials from both countries.

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The close alliance between the CDU and the CSU in Bavaria appears to be unraveling. The immigrants at German borders have dwindled down a trickle, about 11,000 immigrants today compared to the wave of immigrants entering Germany in 2015. The CSU's prime minister in Bavaria Mr. Soder and the Federal Interior minister from the CSU Mr. Seehofer, blame the conflict between the two parties on the 2015 decision by Merkel on immigration. The German ARD broadcaster shows 62% of Germans favor stronger action on immigration. The pressure on the CSU comes from the gains by the anti-immigration party AfD in recent national elections. The CSU hopes that by shifting its own position on immigration to a standoff with the CDU and Merkel's position it can hold off the Afd in the elections in Bavaria in October 2018. The pressure on Merkel comes from members in the CDU and from the SPD leadership, which have accomodated some of the criticism of open immigration to reduce the immigrants at German borders, yet now see the need to meet any challenges to Merkel's authority. This is why the head of the SPD, Ms. Nahles called Mr. Soder's push for a confrontation on the immigration issue as acting "like a bonzai Trump." The CDU party leaders in Bavaria call for a "axis of the willing" joining leaders of the governments in Austria and Hungary. and the newly elected government in Italy to impose immediate controls on immigration at the borders. Merkel says she is open to different points of view within the CDU-CSU alliance, but action should be based on keeping the European Union together, and be taken after EU meetings in Brussels. Will this result in a fall of the government? Angela Merkel has adapted to the changing situation on immigration leading to the small trickle in new immigrants at German borders today. Even if the AfD anti immigration party joins the CSU the percentage of the vote for the AfD is mainly in the eastern part of Germany, and CSU in Bavaria, with 12.6% voting AfD in 2017 elections, and about 7% voting CSU mainly in Bavaria. This compares with the Left at 8.9%, Greens at 9.2%, and SPD at 20.5% for a combined 38.6% of the vote that favor Merkel's new coalition policies. This combined with the 25% of the vote gained by Merkel's CSU party gives it about 64% of the vote and about 489 seats in the 709 seat German parliament. A test of Merkel's authority is not likely to be sustained. By making this a pro-European position Merkel has shifted the issue from one of immigration which is now minimal and one on which Merkel has adapted her policies to a stand on Germany as leader with France of the European Union. At this particularly sensitive time when Germany and France are negotiating with the U.S. on trade and Britain on Brexit, German public opinion is likely to consider the impact of new elections and more uncertainty as not good for Germany. With the SPD, Left, Greens and CSU having 64% of the vote, and the anti immigrant parties CSU, AFD about 20% concentrated in the less economically developed eastern part and in Bavaria, the chances that Merkel's position would be weakened or her authority challenged is very unlikely.   ...

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Proof that this is not an ordinary deep recession like those in the post war period comes in the way foreign trade is reacting in this downturn. Already evidence of this has been seen in the way Germany has been affected because of slowing exports from China to the US. German exports to China have declined as the Chinese export model comes under severe stress. A similiar situation is playing out for Japan. Now new proof of the drop in foreign trade is emerging in Commerce Department figures. Combined exports and imports of the USA dropped 18% in 4 months July to November, to $326 billion from $398 billion. Two thirds of this drop was in imports. So China and Japan's exports to the USA are severely affected. Japan showed a 27% decline in exports in November, according to the Japanese Ministry of Finance, and imports dived 14%. According to calculations by the WSJ, Germany had 11.8% decline in foreign trade in November, and similiar numbers for France and Britain. Chief US Economist at IHS Global Insight, Nigel Gault, says this is going to be the worst global recession since World War II. Combined with what is happening to inventories, (see links) and what is happening in housing, banking, the auto industry, and other industries, the complications of non-transparent packaged financial products clogging the American financial system, the hugely indebted consumer (see links), and the $2.1 trillion and rising cost of the stimulus and bailouts needed by one estimate, suggest that the recovery forecast for 2009-2010 does not take into account all these simultaneously occurring patterns and developments working together. ...

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China's COSCO taking an ownership stake in Hamburg port was opposed by the Greens and Free Democrats parties in the three party coalition government with the SPD in Germany. Scholz of the SPD went ahead over their opposition saying this will preserve jobs in Hamburg port. In the compromise reached the ownership is capped at 24.99% so that no foreign country owns a majority stake. At one point Germany's cyber security agency BSI classified the Hamburg port as critical infrastructure.

China is Germany's largest trading partner  for 7 years with trade reaching a record $320 billion.

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NHK shows that over her 16 years as chancellor in Germany Merkel conducted policy that built the overconcentration of trade and investment in China. This policy is now seen as posing serious risks for Germany now that lessons are being learned from the failure of the overconcentration of investment and dependence on fossil fuel supplies from Russia, a policy pursued by Merkel. It was  the deputy chancellor Habeck as Energy Minister who did the remarkable job of getting new supplies from other countries to replace Russian oil and gas. This made it possible for Germany to make it through the winter without supplies from Russia. Germany is now shifting away from this overconcentration in its supply chain in the new security strategy. This may only be the beginning of a larger change in Germany's policies.

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The U.S. Mexico, Canada trade agreement USMCA is now seen as a model for future trade agreements with China, Japan, Germany, the EU, and Britain as it leaves the EU. It is based on a pro-growth, labor protections, higher wages in America model. The USMCA provisions to raise American wages for workers, improve labor protections in developing countries, pro-growth, and level playing field, are portable and can be transferred to other trade agreements. The USMCA now has support from all parties and is expected to become law when it passes Congress next week. The USMCA when applied to countries that favor or subsidize their businesses also provides a template to level the playing field and ensure fair competition.

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Five of eight unions in the German Confederation of Trade Unions DGB have increased membership. There is a shift to younger members as older workers retire. Membership is more engaged than ever before. More unions are taking up the issue of wage increases after workers were accomodative during the pandemic and Ukraine war. DW.com shows graphs of German workers having lost 18 days due to strikes coming ninth in the developed economies compared to 92 days in France, Canada 78, and the US 9 days. Cost of living action is seen as needed by workers for fair wages. There are 1.8 million open jobs and workers are now getting more confident to ask for better working conditions and higher pay, say experts. This is also happening in the US with president Biden's support. The problem is that only 50% of jobs in Germany are covered by collective bargaining agreements designed to ensure that companies pay decent wages. The EU directive in 2022 set a target of 80% for collective bargaining agreements. This makes it harder for unions yet the unions and workers are taking up the work with enthusiasm.   ...

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The 2022 industrial trade fair in Hanover, Hanover Messe, is covered here in DW.com with 2500 exhibitors showing how they are responding to a changed world after the pandemic and the Russian invasion of Ukraine with support from China. Export oriented companies have to rethink their strategy says Thilo Brodtmann, the executive director of the German Engineering Federation, Supply chain disruptions and the pandemic have led to many German companies reexamining their reliance on Chinese suppliers. Human rights and democracy are now part of the reorienting of business in a new direction. The war in Ukraine is also having an impact. Reducing CO2 emissions is also a major part of the reexamination. Chancellor Scholz told the Hanover Fair at the opening ceremony -"We need to bring along with us emerging and developing countries, whose demographics and economic dynamics are turning them into new centers of power." Brodtmann says the solution is "to become independent and to have a completely different value chain." The head of the German Associaltion of Electrical and Electronics Industry Wolfgang Weber says "I'm quite sure that German companies are ready to invest in any of these countries in Asia, Latin America, and Africa to diversify their supply chains." However such new markets are not very well represented at the Hanover Fair, so that policymakers and German business have a lot of work to do to open up new markets across the world in Asia, Latin America and Africa. India, Indonesia and Vietnam are considered to offer good prospects for diversifying Germany's supply chain and a lot of work needs to be done. ...

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Trade between Russia and Germany was about $100 billion in 2013, or about 3.3% of German exports. About 300,000 jobs depend on exports to Russia, according to Germany's DIHK Chambers of Commerce. A poll released by Der Spiegel on July 27, 2014, shows 52% of Germans now support tough sanctions on Russia, with the mood shifting following the death of 193 Dutch residents on Malaysian Airlines Flight 17. Finance minister Schauble told the Bild newspaper- "Damaging pece and stability would be the biggest risk for the economy."

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The recent appointment of fast food executive Andrew Puzder as Labor Secretary has caused great concern among union leaders. Puzder supports a $9 minimum wage compared to $15 supported by Democrats. Unions now represent 7% of the labor force, down from a high of 20% during Reagan's time when Reagan appointed a construction company executive as Labor Secretary and cut regulations.  Globalization has thinned the ranks of workers in unions. And the failure of Democratic administrations to stem the shift of factories overseas to China, Mexico and other places, as part of global supply chains focussed on cost, has weakened Democratic support among workers since the period of Bill Clinton. It eroded to the point where Obama won 65% of support among unions and Hillary Clinton won 56% in 2016. Interestingly the Republican Romney gained 33% versus 37% for Trump, showing voters were more inclined to move away from Democrats and only a smaller number willing to support Republicans, but the shift enough to give Republicans a win in 2016 for the presidency. The figures are from a Election Day survey of trade union AFL-CIO, and a larger proportion in midwestern states showed disaffection with policies from Clinton to Obama. In fact Obama spent years promoting another free trade agreement TPP that favored tech more than auto and older industries, just as Bill Clinton had promoted NAFTA, without giving thought to what this was doing to its worker base of support. A similar situation happened with Social Democrats in Germany as a SPD administration moved to the centre and handed Christian Democrats led by Merkel a win in parliamentary elections. As Democrats such as former Labor Secretary Reich, a professor at UC Berkeley who served under Bill Clinton, describe the problems of working class people their is less reflection on the impact of the changes from globalization and how Democrats handled or mishandled it, and more on the politics between the two parties.   ...

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The impact on global trade of the pandemic is uneven with faster recovery in export led economies China, Germany and South Korea, and slower recovery in U.S., France and India. Export shipping from ports in Ningbo, China, Hamburg, Germany, and Los Angles, U.S. are gradually returning to normal. Yet the impact on orders from the U.S. for Chinese companies is slow compared to before the pandemic and some companies in China says the orders are placed to meet current demand but future demand is uncertain. As trade recovers the U.S. and European policy on supply chain renewal is leading to companies redoing their supply chains. This means less manufacturing in China and more in the U.S., Europe and other parts of the world following the pandemic.

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A professor of sociology at the University of Basel describes the growing inequality in Germany, in graphic terms. For the lower middle class the efforts to gain upward mobility are like trying to move up on a downward escalator. About one third of jobs are temp jobs which lack the protections of permanent jobs which were at one time 90% of all jobs. Her book is titled- "The Hidden Crisis; German Social Decline at the Heart of Europe." Nachtwey says on the surface Germany has become competitive and has maintained its growth rate, benefiting from the strong manufacturing sector with trade surpluses, low unemployment. Yet this conceals the underlying crisis of the cost which this has come at- a persistent erosion of the social compact of one elevator where everybody moved up together that was the norm in the early postwar period, fulltime employment, a strong welfare state. Job protections weakened, and while manufacturing sector pay remained stable or rose, less skilled and low wage workers suffered. This has also led to the fracturing in the vote with the fragmentation of political parties following the refugee crisis and the weakening of centrist parties. Voters are now open to different messages after the increase in inequality and uncertain economic future for the lower middle class. ...

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The reckless behaviour of German elites in pursuing increased dependence on Russian oil and gas and ignoring American warnings is shown in this report in The Guardian. The first links to Russian oil and gas were started under chancellor Brandt in 1970. At that time the dependency on oil and gas supplies was much less than 10%. Dependence increased during the Schroeder and Merkel years to the extremes that exist today. Not much more even in the year of the fall of the Berlin Wall in 1989. It was the misconception of chancellor Schmidt of the SPD in his differences of opinion with presidents Carter and Reagan on the risks of increasing dependence on Russian energy that marked this period. Schmidt believed Germany was right in its conviction that increased trade would bring peaceful cooperation without realizing that economic dependency is never a good thing. Poland had a skeptical view- German elites including business elites were being corrupted. Cheap Russian energy was being used in the Schroeder and Merkel years as a competitive business advantage without considering the risks involved and the admonitions of American presidents of the dangers. With Steinmeier of the SPD there was the immense guilt of the millions of war dead from the German invasion of Russia in 1941 that acted as a brake on evaluating the increasing dependency for energy that reached over 35% by the time he was foreign minister. The fall of the Berlin Wall was seen not as a result of multiple factors including the positions taken by Carter and Reagan, the losses to the Russian economy from the war in Afghanistan, and the general decline of the Russian economy. German leaders saw this as coming from the new relationship being built with Russia. German business and Schroeder- Merkel even allowed not just new Nordstream pipelines under the Baltic Sea but also transferred ownership of reserves, the gas and oil storage inside Germany to Russia's Gazprom. German Economy minister Habeck says the storage tanks were emptied so that there would be added surge for oil and gas prices after the attacks on Ukraine. This Guardian report ends by saying that Mr. Steinmeier still needs to show why he pursued policy of cooperation with Russia with increasing dependency to the point that a cut off of Russian oil and gas supplies would lead to gas rationing in Germany in the event of a sudden cutoff. Was it a form of sensible cooperation taking dependency to such extremes. Similar questions remain for chancellor Merkel. With the added question for Merkel about the increase in trading ties with China even after the Trump administration had warned of the serious risks to US and European competitive advantage in technology and manufacturing, and the increased dependence on a supply chain that was fundamentally weak as shown clearly by the pandemic.     ...

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Edward Chancellor reviews the book by Greg Steinmetz on Jacob Fugger of Augsburg, Germany. Fugger (1459-1525) grandfather and brothers established textile factories in Venice and Northern Italy, and made money in the textile trade. Fugger added to this by loaning money to mine owners and buying shares in mines near Salzburg, and establising new mines in Hungary and other parts of central Europe for copper and silver. Augsburg was a free Imperial City and a center of trade with Italy. Hugger financed the election of Charles V of Spain as Holy Roman Emperor, and benefitted from the Hapsburg dynasty's dominant role in Europe made possible through strategic marraiges. This was a period of transition from feudalism to a period of free cities and merchants, of early stage of capitalism. Augsburg briefly holds a new role as the trade and centre of activity shifts from Italy and the Mediterranean to the Netherlands, Britain and the Atlantic. It is also a period of tumult in Europe as the Protestant Reformation and Luther are active in this period, the peasants are also staging revolts for their rights, and merchants are increasing their role through trade and finance....

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This report on Germany's view of US DJT Tariffs does not cite any German economists or experts. It simply rehashes the views of American economists who are the source of the problems America has on world trade because they supported textbook ideas about trade that have no connection to reality onthe ground - the experience in towns and communities dependent on factories across America for two decades. It says nothing, prefers to ignore and present a false narrative that has been around for so long in America that has led to it's deindustrialization with loss of 5 million jobs and tens of thousands of factories. It is destroying America's industrial base, while Germany sends its millions of cars Made in Germany into the US.  This is the kind of approach taken by Germany and China because they benefit from a system that American companies and economists, and three previous presidents have allowed or tolerated from Clinton, Bush, Obama for 25 years. ...