Merkel defends Germany's trade surplus as US trade war looms

German Chancellor Angela Merkel defended the country's trade surplus Saturday, saying the government is working to encourage domestic demand but that not all factors are under its control.

U.S. President Donald Trump's administration has been critical of Germany's trade surplus. Merkel's comments in her weekly podcast came as Economy Minister Peter Altmaier was getting ready to head off Sunday to Washington for talks as a possible trade war looms between Europe and the U.S.

Merkel said domestic demand has been growing, helping narrow the German trade surplus to 244.9 billion euros ($301.1 billion) in 2017 from a record 248.9 billion euros the previous year.

But she noted fluctuations in oil prices and exchange rates were outside Germany's control, and the trade surpluses also "show that our products are in demand."

Trump has announced tariffs on steel and aluminum imports to the U.S., and the European Union on Friday published a list of American products it plans to introduce duties on if it is not exempted from the U.S. steel and aluminum tariffs.

Germany and other EU nations have argued that they follow fair trade practices and suggested that the real problem lies with China's overproduction in recent years.

In a telephone conversation with Chinese President Xi Jinping on Saturday, Merkel discussed overcapacity in world steel markets. Her office said the two leaders agreed to work on possible solutions within the framework of the G20 industrialized nations.