President Donald Trump has promised to be strong on trade and make sure that he gets the best deals for America, which has put several countries on notice that it’s not going to be business as usual anymore. Now, a new trade target is on the table and it’s not one that many would expect — Germany.

The Washington Post reported:

President Trump’s top trade adviser said Germany was using a “grossly undervalued” euro to “exploit” its trading partners in Europe and the United States, comments that triggered a spike in the euro’s value to a one-week high. TRENDING: Then-Attorney General Kamala Harris Outright Refused To Enforce Restrictive Sex Offender Law in California In comments to the Financial Times, Peter Navarro, the head of Trump’s National Trade Council and an architect of many of the administration’s trade policies, also declared a proposed trade agreement between the United States and Europe to be dead, citing Germany’s currency as an impediment. Angela Merkel responded Tuesday by saying that Germany does not influence the value of the euro and supports an independent European Central Bank. Navarro’s comments about TTIP appeared to stem from his preference for bilateral trade deals, which he, Trump and other advisers believe give the U.S. more leverage in trade negotiations. The United States and other European countries have long criticized Germany for its trade deficit, though typically in subtler and more diplomatic tones.

“A big obstacle to viewing TTIP (Transatlantic Trade and Investment Partnership) as a bilateral deal is Germany, which continues to exploit other countries in the E.U. as well as the U.S. with an ‘implicit Deutsche Mark’ that is grossly undervalued,” Navarro said.

“I personally view TTIP as a multilateral deal with many countries under one ‘roof’,'” said Navarro. “The German structural imbalance in trade with the rest of the E.U. and the U.S. underscores the economic heterogeneity within the E.U. — ergo, this is a multilateral deal in bilateral dress.”

“I think [Navarro] has a point, in that Germany has basically set up the rules in the euro area to suit itself, and if they hadn’t been a euro area, the German currency, the Deutsche Mark, would be much stronger now, and that would hurt their exports,” Joseph Gagnon, a senior fellow at the Peterson Institute for International Economics, explained.

“I’m on the record being critical of Germany’s euro policy, but Merkel is not wrong. Germany does not control the exchange rate. Neither does the ECB,” Matthias Matthijs, a professor of international political economy at Johns Hopkins School of Advanced International Studies, said.

“In many ways, the weaker euro is a consequence of the ECB’s quantitative easing policies, and these are policies that both the Fed and Japan’s central bank have implemented,” Matthijs added.





