Peter Navarro
© BloombergPeter Navarro, Chief Trade Advisor
Peter Navarro, Donald Trump's chief trade adviser, says euro is an 'implicit Deutsche Mark' through which Germany exploits its trade competitors. Peter Navarro, the head of President Trump's new National Trade Council, is accusing Germany of 'currency manipulation' and is saying that TTIP is dead.

Navarro is being quoted by the Financial Times as calling the euro an "implicit Deutsche Mark" whose low valuation is giving Germany an unfair trade advantage against its competitors - including the US. On that basis he says that the Transatlantic Trade and Investment Partnership ("TTIP") currently under negotiation between the US and the EU, is unrealisable.

According to the Financial Times this is what Navarro said:
A big obstacle to viewing TTIP as a bilateral deal is Germany, which continues to exploit other countries in the EU as well as the US with an 'implicit Deutsche Mark' that is grossly undervalued. The German structural imbalance in trade with the rest of the EU and the US underscores the economic heterogeneity [diversity] within the EU — ergo, this is a multilateral deal in bilateral dress.
These comments will fuel even more concern in Germany at the direction the Trump administration is taking.

One of the reasons for Angela Merkel's strong political position in Germany is that the combination of Germany's longstanding industrial strength and the euro - which trades internationally well below where a Deutsche Mark would trade - has enabled Germany to export its way out of its economic problems. The result is that Germany has not experienced a serious recession since Merkel became Chancellor, even during the crisis period of the world financial crisis in 2008.

Should this combination of German industrial strength and the (relatively) weak euro ever be threatened Germany might face a serious recession, in which case the German economy might take Merkel down with it.

Beyond such political considerations, there is also of course the effect of a serious recession not just on German households - who have been experiencing a stagnation in their real wages for some time - but on Europe as a whole.

In light of all this it is not surprising if Donald Tusk, the President of the European Council who is known to be close to the German government, is sounding the alarm, and is talking of Donald Tusk [Trump] as a threat to Europe.