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US-Germany Trade Relations: From Foes to Friends
Putting the Past Behind

Since as early as 1910ís, the US and Germany had been on relations that can never be termed as cordial. With both nations on the opposite warring factions in World War I, enmity didnít need much of a push. World War II deteriorated the situation even further. And for a long standing time, Germany had been a recognized foe of the United States. But as the popular saying goes, time healed everything. Trade relations and diplomatic pull-offs turned the sour relation into a mutually benefiting one. And today, with Germany being one of the largest individual nations as a trade partner to the US, relations have never been better between the two countries.

Not only is Germany one of the top sources of imports, but it has also formed a major base for American exporters to cater their goods. Also, this bilateral trade and mutually beneficial foreign trade business has improved the cooperation between the two countries. Both US and Germany, who were enemies in the two World Wars that had taken place earlier, shook hands and formed a number of alliances. Some of the most powerful and most influencing of these alliances are NATO and G8 and the economic group G5. The United States has a number of organizations and educational intuitions that are run in tandem in Germany as well as in America. The revenue that USA gets from German tourists visiting the country is immense. This is the same case with the European country, as American tourists throng the country that had been destroyed by the Second World War and has risen from the ashes to take its place among the powerhouses of the world. Today, German Americans are the largest groups of ancestries living in America, comprising almost 15.2% of the whole population.

Trade relations between the two countries have improved ever since the Cold War. As the Russians threatened the United States with its quick armament progress, the US looked forward to strengthen its ties with the European nations. Among them, USA found its major ally in the former foe, Germany. The latter was looking for a partner that would boost its huge manufacturing units and yet will not completely control the nuances of its economy, and found the perfect partner in the United States. And international trade was the biggest gainer from this new-found friendship.

Major Exports and Imports

Germany is one of the biggest industrial states in the world. And this is because the German populace has been taking inspiration from its immense strength in the pre-world war era which was derived from extensive industrialization. The success story of the Germans is portrayed through its export-import statistic maps. Germany has been the largest exporter of goods and manufactured merchandise in the world. On the other hand, USA is one of the established powerhouses in the world and their economy is also driven by imports and exports, of which a major trading partner is Germany.

The mutual trade between the two countries and their respective economies are hugely driven by the exports and imports, which have been flourishing since the Cold War. While Germany has invested heavily in the US, the American investments in Germany are worth almost over 100 billion dollars, the largest investment by any individual country in a European nation. The German investments also reached a figure of about 100 billon Euros, which again has helped open up the US market to the German entrepreneurs and German manufacturers.

Germany employs over 800,000 people through subsidies in the US alone, while the US employs almost an identical number of employees in Germany. This has made Germany the third largest foreign employer in America and the US is the largest foreign employer in Germany. Almost 50% of foreign direct investment of Germany goes to USA, inevitably making it one of its largest trading partners in the world.

In this mutual stream of global trade, USA has been contributing to the German imports with a share of 7.3%. Among its main imports had been aircrafts, motor vehicles, machinery, oil and gas and computers. In 2003, the net worth of the imports had been $601.4 billion worth in merchandise while $773.4 billion accounted for the import of goods and services. Though the US has maintained a trade surplus in doing business with the country, the trade alliance with this European nation has always been a fair and balanced affair.

USA is one of the top export destinations of Germany. The United States accounts for almost 10% of German exports, coming second after France (11%). With main exports including machinery, vehicles (a specialty with German manufacturers), chemicals, metals and manufactured goods, foodstuff, etc., USA has found a very potent and voluminous trade partner in Germany. Therefore, outside the EU, USA has become the largest trading partner of Germany.

Major Agreements and Conflicts in Trade Issues

Germany, being an important ally of the United States today concerning trade, military issues or as powerful authorities in the UN, it has usually been in a cordial relationship with the superpower since the Cold War. By this time, some issues and deals had the two countries speaking in the same tone and sharing the same point of view.

Both nations are in favor of freer trade that will help open up the international business arena in a much faster way. Also, they want transparency of markets to deal better with issues such as investments and subsidies. But the fact remains that both USA and Germany are not in favor of free trade at the cost of compromising on their own interests. German chancellor Angela Merkel has clearly stated that the interests of the German farmers will not be compromised with against the demands of the WTO or other nations. The US also feels the same.

They both also have been concerned about the rising crude oil prices and the monopoly of OPEC in the oil business. The powerhouses in EU and the US have also discussed this issue multiple times and are concerned that it will affect the economy of both EU countries, especially of Germany, USAís largest trading partner in the continent.

The major conflicts that have risen between the two states after the Cold War have generally been rather recent. In the Iraq War, Germany had refused to give military or diplomatic support to the Allied troops of the United States and other nations. This had threatened to affect the trade between the two states as comparisons from the Second World War were drawn. Media in the US lambasted the Germans, who retaliated with stoic silence on the issue. The issue solved out later as the Germans provided minor support to the US in the later stages of the Iraq War, mostly as a provider of substitute soldiers in American bases in Southern Germany.

More recently, on the Iran conflagration, German entrepreneurs and business heads accused the US of trying to intimidate German businesses in closing trade transactions with Iran. Interestingly, Germany exports almost over $5 billion worth goods and services to Iran. This has miffed the American authorities who want to clamp down on German interaction with Iran. Germany has had cordial relations with the President Ahmadinejad since long and they have dismissed the American demands as they argue that if they withdraw exports to Iran, China and Russia would step on. This would not help the American cause and will hamper German economy as well. But many banks have started cutting down on business with Iranian companies and many have even closed shop in these regions.

Prospective Future

Nevertheless, brushing aside the minor disagreements and points of conflict, the US and Germany are moving on towards a very right trade-oriented friendship that will mutually benefit them. The fact that one is a recognized superpower in the world and the other one a powerful nation in the EU makes the relationship even more special. What had been deemed impossible even half a century back has been made possible by the enterprising economies of the two nations.

But while an American exporter or American manufacturer wishes to invest or prosper in Germany, he or she must also keep in mind the rules of EU and its allied regulations. This is important as being a part of the EU, attending to only the German laws and regulations will not be enough for a businessperson to flourish in Germany. Also, a feel of the cultural ambience and the demands of the product in the country will help achieve better results.

With an unstoppable growth in the trade statistics of the two countries, other nations have also shown an enviable admiration and respect towards this relationship. And with similar cultures and standard of living, this was inevitable. Germany has been a nation that has excelled in making friends out of its old enemies. This is clearly exemplified by the fact that France and the US, who were its prime opponents in the World Wars, are now its largest trading partners. And this is just the beginning!


Note: Trade statistics, industry links, economic projections and global business resources on this page have been compiled from hundreds of trade related websites, government guides and resources on the Internet. We provide this valuable information for industrial suppliers, manufacturers, exporters and importers seeking to enter or expland business opportunities in Germany.

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