Final answer:
US exports to Germany would likely decrease if the US dollar becomes more expensive for Germans to buy, making US goods and services less competitively priced and reducing demand from German consumers and businesses.
Step-by-step explanation:
If the US dollar becomes more expensive for Germans to buy and all else remains the same, US exports to Germany would be expected to decrease. This is because when a currency appreciates, making it more expensive for foreign buyers, the country’s exports tend to become less competitive due to higher prices for those buying in a different currency. In this hypothetical scenario, the currency appreciation would make US goods and services more expensive for German consumers and businesses, which would likely lead to a reduction in demand for those goods and services.
Historically, Germany has run substantial trade surpluses, with exports exceeding imports, while the US has experienced trade deficits, with imports exceeding exports. An increase in the value of the dollar would exacerbate this trend unless other economic changes occurred, such as a shift in production costs or changes in consumer preferences. Given that in this scenario, trade is initially balanced, a change in the exchange rate without any other adjustments would likely disrupt this balance, leading to a trade surplus for Germany and a trade deficit for the US.