Five things to understand US-German trade relations

As the relationship between US President Donald Trump and German Chancellor Angela Merkel appears to be getting tense, here are some things you should probably know about their countries' economic relationship.

A brewing diplomatic crisis between the United States and Germany has its roots in President Donald Trump's frequent criticism of the large US trade deficit with the European economic powerhouse.

SEE ALSO: New Trump attack on Germany widens transatlantic rift

Here are some key facts about the economic relationship between the two countries:

1. Trade deficit

The US trade deficit in goods and services with Germany in 2016 fell to $67.8 billion, due to a 0.7 percent increase in exports to $80.4 billion, and a 5.7 percent drop in imports, which totalled $148.1 billion, according to government data.

That ranks as the second largest deficit, behind China ($310 billion), and followed by Mexico ($62 billion), and Japan $56 billion.

Unlike those countries, however, where the US has a surplus in services, it has a deficit with Germany in both goods and services, the latter amounting to $2.3 billion last year.

2. Imports

The United States is Germany's most important export market, but Germany ranks as the fifth biggest source of US imports, behind China ($480 billion), Mexico ($324 billion), Canada ($313.5 billion) and Japan ($165 billion). 

Capital goods make up nearly $40 billion of products imported from Germany, while autos, parts and engines amounted to $32 billion, followed by consumer goods at nearly $20 billion.

3. Exports

Germany is the sixth largest market for US exports, behind Canada ($322 billion), Mexico ($262 billion), China ($170 billion), UK ($121 billion) and Japan ($109 billion).

The largest component of US exports to Germany was "other goods and services," which totalled just under $28 billion last year, followed by non-auto capital goods at $21 billion.

4. Investment

In 2015, German firms invested $255.5 billion in the United States, an increase of nearly 14 percent over the previous year, ranking as the seventh biggest foreign investor. The UK was first with $484 billion followed by Japan with $484 billion.

5. Employment

German companies are the third largest foreign employer in the United States, with over 670,000 workers, nearly half of which are employed in manufacturing.

Source: https://www.thelocal.de