EU's surplus with US grows as China feels bite of trade wars
The European Union's trade surplus with the United States surged by 12.7pc in the first five months of this year as the bloc appears to have benefited from the rising tide of anti-China tariffs imposed by US President Donald Trump.
Data released by European Statistics Agency Eurostat on Wednesday showed that the bloc's exports to the U.S. rose to €187.3bn in the five months from €163bn. With the latest round of China tariffs now showing up in Beijing's June trade data, there may more to run for both the EU and for Ireland.
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Data from the Central Statistics Office released on Monday showed exports from Ireland once again outperformed expectations, suggesting that full-year growth may exceed the 4pc level. Another bumper year for company tax receipts is possible too, as trade is dominated by the same multinationals that pay the bulk of corporate taxes.
Ireland's seasonally adjusted trade surplus widened to €6.5bn in May from April's €5.3bn, the CSO said.
However, Mr Trump has turned his attention to Europe and has threatened to impose tariffs on car imports, citing economic security issues.
The President has also attacked the European Central Bank, saying that its policy has made the euro undervalued against the dollar, suggesting a new line of attack.
Ireland, along with Italy and Germany was added to the U.S. Treasury's currency manipulation watch list in May.
Trump might have a point on the dollar-euro rate, although there is probably precious little he can do about it.
The euro is 20pc undervalued against the American currency using the Economist's Big Mac Index, which makes the concept of exchange rate values understandable by looking at the cost of the burger across the world.
Mark Sobel, a former senior official at the U.S. Treasury, wrote in an article that the funds available to the Treasury Exchange Stabilization Fund were small with a balance of less than $100bn, with dollar holdings around $23bn, enough "to send a few warning shots, but they are not enough for a major campaign".
"Most valuation metrics see the dollar as overvalued, and some in the Trump administration see the dollar as highly misaligned. The dollar's firmness owes much too relative US outperformance versus other major economies, and is buttressed by ill-advised US deficit-raising fiscal policies," he wrote.