Page 20 - May-June 2018 GSE Report Flip Book

MONETARY POLICY
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On the trade front, Merkel is facing growing pressure from President Trump, who is demanding the following actions:
• Germany increase its minimum contribution from its current 1.2% of GDP (in 2017) to 2% for their own NATO defense;
• Germany and the EU support enhanced sanctions against Iran
• Germany and EU lower or eliminate all protectionist trade barriers and
negotiate new trade deals.
If these issues are not resolved, Trump has suggested placing a 20% tariff on all EU automobiles shipped into the U.S., a move that threatens the heart of the German economy—the auto industry, which generated total revenue of 426 billion euros of revenue in 2017 and employed more than 800,000 people. The German auto-sector—and the German economy—simply cannot survive without low cost access to the U.S., their biggest customer.
Today, the U.S. levies just a 2.5% tax on cars imported from Germany and other EU members versus 10% charged on all American-made cars sent to the EU. Approximately $192 billion of cars, trucks and parts are imported each year, including $96 billion under NAFTA.
Trump has also ordered Pentagon staffers to analyze the costs of a large-scale withdrawal or transfer of American troops from Germany. The American military presence in Germany is the largest U.S. force in Europe, including approximately 35,000 active duty troops. “[T]he question of where the Western defense pact fits into a 21st century in which Europeans disagree among themselves, as well as with the United States, on economic, trade and immigration issues,
and in which the world is undergoing a basic realignment with the rise of Asia, has led some
to consider a new arrangement,” wrote Washington Post’s John Hudson, Paul Sonne, Karen DeYoung and Josh Dawsey (Bloomberg, Chris Reiter, 05/24/18; Washington Post, John Hudson, Paul Sonne, Karen DeYoung and Josh Dawsey, 06/29/18; NBC News, Alexander Smith, Abigail Williams and Andy Eckardt, 04/26/18)
Economic turmoil in Iran triggers protests
Geopolitical Futures’ staff wrote:
The Iranian government is buckling as problems mount for the Rouhani administration. A weak currency sparked protests among rank-and-file shopkeepers against the country’s poor economic performance. Top officials from the Islamic Revolutionary Guard Corps made ominous statements. The
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