Germany, Europe’s largest economy, has long relied on an export-driven economic model to fuel growth. However, as exports to its two largest markets—the United States and China—decline simultaneously, this model is coming under unprecedented pressure.
In 2025, Germany’s exports to the United States fell sharply, while shipments to China also weakened. As a result, Germany has slipped into a record trade deficit with China, reaching nearly 90 billion euros, leaving its global trade position increasingly fragile.
According to Euronews, a study by the German Economic Institute (IW) found that transatlantic trade relations are under significant strain due to tariff policies introduced by US President Donald Trump. This pressure was clearly reflected in the export performance of German industries during the first three quarters of 2025.
The study showed that Germany’s exports to the United States fell by 7.8% in the first three quarters of 2025 compared with the same period a year earlier, marking a sharp reversal from the average annual growth of nearly 5% recorded between 2016 and 2024.
The decline was concentrated in Germany’s key industrial sectors, including automobiles, machinery and chemical products, which together account for more than two-fifths of Germany’s total exports to the US. These three sectors alone dragged exports to the US down by more than 5.2 percentage points year on year, accounting for over two-thirds of the total decrease.
The downturn in exports to the United States is largely attributed to a renewed wave of tariffs imposed by President Trump after his return to the White House in January. German car exports to the US fell by 14%, while machinery exports dropped by 9.5%, amid tariffs of up to 50% on steel, aluminium and related products.
The IW report warned that as US tariffs are unlikely to return to previous levels in the short term, export results in the third quarter of 2025 may reflect a “new normal” for German-American trade.
Although Germany’s overall exports edged up slightly in the first three quarters of the year, the study noted that this masked a worrying decline in competitiveness. In key sectors, export volumes have been pushed back to levels seen several years ago. In some major industries, exports to the United States have fallen back to 2022 levels or even to early 2019.
The report, authored by IW senior economist Samina Sultan, concluded that Germany can no longer rely on a recovery in traditional export markets. Instead, it urged Berlin to implement urgent measures to diversify and deepen integration within Europe. The study argued that Germany must invest more heavily in developing alternative export markets, while removing remaining barriers within the EU single market and accelerating free trade agreements with third countries.
At the same time as exports to the US are declining, Germany is facing a second structural shock from China. While the downturn in the US market is directly linked to trade policy, the slowdown in exports to China reflects deeper changes in the global economy and in China’s own industrial capabilities.
As Germany’s imports from China continue to rise, exports in the opposite direction are shrinking, pushing the trade deficit to a historic high. China is expected to drop out of Germany’s top five export markets for the first time since 2010. According to Germany Trade & Invest (GTAI), German exports to China are forecast to fall by around 10% this year to approximately 81 billion euros.
Such a decline would push China down to seventh place among Germany’s most important export destinations—a notable reversal for a market that has dominated Germany’s export landscape for more than a decade.
While the fall in German exports to the United States is largely tied to President Trump’s tariff policies, the weakening of trade with China reflects deeper, structural shifts. Chinese manufacturers, particularly in the automotive and mechanical engineering sectors, have rapidly closed the technological gap with German competitors and in some segments are now competing at a comparable level.
As Beijing promotes self-sufficiency and domestic production, German exporters are finding it increasingly difficult to defend their market share in what was once their most important source of growth.
Source: vneconomy.vn
