Peter Navarro, the head of the new National Trade Council accused Germany of gaining unfair trading advantages from the “grossly undervalued” euro.
Speaking to the Financial Times he said that the currency was an “implicit Deutsche Mark.” He singled out Germany as an obstacle between trade between America and the EU.
Navarro, is an academic and a strong critic of China’s negative impact on the U.S economy.
Since Navarro made the comments the euro has gone into an eight week high almost to the point where it matched the value of the dollar. Prior to this, the value of the euro was comparatively low with negative interest rates and subject to monetary stimulus measures.
Angela Merkel rebuffed the comments. Speaking in Stockholm she said, “Germany is a country that has always called for the European Central Bank to pursue an independent policy, just as the Bundesbank did that before the euro existed.
“Because of that we will not influence the behaviour of the ECB. And as a result, I cannot and do not want to change the situation as it is.”
Navarro’s Comments Rebuffed
Navarro’s comments have not gone down well with analysts. One, Michael Hewson, said that the European Central Bank (ECB) sets monetary policy for the whole Eurozone and not Germany. He implied that what Navarro said was plain wrong from a technical aspect and was designed to undermine the status quo.
The Trump administration had previously targeted China over currency saying they were artificially undervaluing it.
Many ECB policies are unpopular with Germans as printing euros to buy government bonds and slashing interest rates effects savings in a negative way.
Vasileios Gkionakis said that the Trump administration sees the exchange rate as one of the main ways to deploy trade policies.
Navarro was appointed head of the new department by Donald Trump who he advises on trade.