President Donald Trump is betting on the wrong strategy to reduce the U.S. current account deficit when threatening foreign firms with a border tax, an analyst told CNBC on Tuesday.
"My best advice to the U.S. administration is if you want to have a smaller current account deficit improve your products and your exports. That's the best way. It's not by punishing foreign exporters," Marcel Fratzscher, president at the German Institute for Economic Research (DIW), told CNBC on Tuesday.
President Trump has threatened to impose a border tax as high as 35 percent on cars built outside the U.S. The German carmaker BMW was among the threatened companies.
However, German officials said that its industry should not be worried.
"We are a highly successful, technologically advanced export nation with many hard-working people and smart companies," Sigmar Gabriel, the German vice chancellor, told German press on Tuesday.
He added that at the moment German exports to the U.S. total only 10 percent of their entire output, while 60 percent goes to other European countries, Reuters reported.