Is There a No Good, Very Bad, German Trade Deficit?

President Trump took to Twitter Tuesday morning to amplify comments he made during the European leg of his overseas trip. He controversially, and indelicately, invoked one of his key issues — trade policies that put America first, or fail to — in a meeting of E.U. leaders last Thursday, during which he reportedly said, "The Germans are very bad, very bad." (White House economic adviser Gary Cohn later clarified Trump was talking about trade policy.) At a campaign event in Munich on Sunday, German Chancellor Angela Merkel, who is running for reelection, acknowledged a new distance between Germany and the United States.

Trump then repeated his criticism of German macroeconomic policy Tuesday morning, on his own terms. The President wrote, at 6:40 AM, "We have a MASSIVE trade deficit with Germany, plus they pay FAR LESS than they should on NATO & military. Very bad for U.S. This will change." All-caps and adjectival emphasis notwithstanding, Trump's complaints stand on clear factual merit:

The trade gap the United States. has with Germany ($67.8 billion) is second only to its 2016 trade gap with China, a deal with whom has long been Trump's top target.

Using NATO guidelines, the objective measure of what Germany "should" spend—2% of GDP, per a 2006 agreement—there is no denying that Germany shortchanges its military budget. (Last spring, Merkel announced a plan to increase Germany's defense budget in the coming years to reach that goal.)

Trump's focus, however, and his means of making his point are flawed for reasons Gary Hufbauer, a trade expert at the Peterson Institute, was kind enough to explain to TWS Fact Checker.