One of Donald Trump's heads of trade has said that the euro is a "grossly undervalued" currency and that it has been exploited by Germany, to the detriment of both the United States and the rest of the EU.
Peter Navarro, the head of Mr Trump's new National Trade Council, told the Financial Times the euro was like an "implicit Deutsche Mark" whose low valuation gave Germany an advantage over its key partners.
"A big obstacle to viewing TTIP as a bilateral deal is Germany, which continues to exploit other countries in the European Union as well as the USA with an "implicit Deutsche Mark" that is grossly undervalued", the FT quoted Navarro as saying on Tuesday.
First, and since it comes just days following the president's comments about the "too strong dollar", it suggests that the U.S. administration sees the exchange rate as one of the main anchoring points for the deployment of its trade policies. With U.S. officials seeking to drive a wedge between European Union nations, the bloc's president, Donald Tusk, placed the U.S. alongside Russia, China and terrorism as a source of instability.
Navarro and Ross also argued it was a great injustice that the majority of World Trade Organisation member countries assess import and export valued added taxes (VAT) in addition to customs duties against U.S. products, while the U.S. does not assess VAT against any imports. "I am not the only person or economist of that point of view".
The spat underscores growing angst in the European Union about the direction of US policy on trade, migration, the integrity of the EU and support for decades of trans-Atlantic economic and defense ties.
Germany runs a massive trade surplus, exporting far more goods than it imports.
The U.S. and other European countries have long criticized Germany for its trade deficit, though typically in subtler and more diplomatic tones.
Japan's Nikkei dropped 1.7 percent, its biggest fall in nearly three months.
Wall Street, already lower on weak earnings reports, sunk further after Trump's meeting in which he called on the pharmaceutical industry to boost their USA production and lower their prices.
He said White House criticism of the euro in the context of Brexit and the rise of populist candidates like Marine Le Pen in upcoming European elections puts "Eurozone breakup risk at the highest since the bloc's inception".
Though growth overall remains sluggish in the euro zone, there are signs that the economy is changing, with inflation picking up in Germany in recent months.
In emailed comments to the Financial Times, Mr. Navarro also blamed the failure of the proposed trade deal between the USA and Europe on Britain's decision to leave the EU.
French President Francois Hollande has also said the Trump administration poses challenges for Europe.
Mr Navarro also reiterated that the Trump administration will focus on bringing manufacturing and production back to the U.S. shores.