Berlin’s annual trade surplus could be as high as €80billion (£70billion) which has encouraged Professor Heiner Flassbeck, the country’s former state-secretary of finance, to declare that Angela Merkel is “cooking the books”.
He said: “They’re cooking the books so that the surplus does not look as if it is increasing. What they are doing is a form of ‘political smoothing’, but very few people understand this.”
Gary Hufbauer, a trade expert from the Peterson Institute in Washington, claimed that the Republican firebrand could harness the power of “section 232” to launch a wave of sanctions “against European steel” and impose “some sort of quota on autos”.
He explained: “He will definitely go against European steel, and the next most likely is some sort of quota on autos.
“The two key words he keeps using are ‘reciprocal’ and ‘fair’. What he seems to mean is that trade is not reciprocal if a partner has a big surplus, and not fair if it has barriers that the US does not have.
“Germany is very ‘unfair’ on autos because the EU has a tariff of 10 per cent while the US tariff is 2.5 per cent.”
The sizeable “bilateral trade surplus” is of great concern to the US that could end up punishing the entire EU for the uneven trade flows of Berlin.
The US treasury’s latest report declared: “Germany’s bilateral trade surplus with the US is very sizeable and a matter of concern.
“Germany has a responsibility as the fourth-largest economy globally to contribute to more balanced demand growth and to more balanced trade flows.”
Reports claim that “80 per cent to 90 per cent” of Berlin’s trade is coming from external demands.
Meanwhile, Peter Navarro, the White House trade advisor, claimed that Mrs Merkel keeps her Deutsche Mark “grossly undervalued” by using the EU’s Economic and Monetary Union.
After arguing that the US experiences a “very unfair” relationship with the EU, Donald Trump could launch a scathing trade attack on the bitter bloc in an attempt to force Germany to change its ways.
During an interview with presenter Piers Morgan, Mr Trump said: “I’ve had a lot of problems with the European Union, and it may morph into something very big from a trade standpoint.
“It’s a very unfair situation. We cannot get our product in. It’s very, very tough, and yet they send their product to us – no taxes, very little taxes.”
If Mr Trump does punish the EU for issues surrounding trade, this could lead to an all out battle between the bitter bloc and the US.
The EU stated: “The European Union stands ready to act swiftly and appropriately in case our exports are affected by any restrictive trade measures from the United States.”
However, Mr Hufbauer believes that the Republican firebrand could “retaliate” again and create heightened tensions between the US and bitter bloc.
He went on: “This is a president who could retaliate against retaliation.”
If Mr Trump imposed a sanction on German steel and automobiles, the entire EU would be dragged into the fold – this could punish nations like Ireland that significantly relies on America for trade.
Germany has the biggest surplus in the world, in absolute terms, after statistics showed that it reached $287billion last year – this outweighs that of China.
Berlin has also been above 8 per cent of GDP for the last few years.