As a context for understanding the shift in trading partners, recent data shows that in 2024, the United States regained its lead as Germany’s largest trading partner, overtaking China, which had previously held the top spot. This shift occurs amid political and economic tensions, impacting both trade flows and the dynamics of the German economy. But now things may be turning around again.
The US regains leadership as Germany’s largest trading partner
China came close to overtaking the United States as Germany’s largest trading partner in the first half of 2025, preliminary data from the German statistics office showed, as German exports to the U.S. declined amid higher tariffs. German imports and exports with the U.S. totaled about 125 billion euros ($145 billion) from January to June, while trade with China reached 122.8 billion euros, according to Reuters calculations.
“Although the U.S. was able to defend its position as Germany’s most important trading partner, the lead over German trade with China is razor-thin,” said Vincent Stamer, economist at Commerzbank.
The U.S. had overtaken China as Germany’s top trading partner in 2024, ending an eight-year streak for China. The shift came as Germany sought to reduce its reliance on China, with Berlin citing political differences and accusing Beijing of unfair practices. Trade dynamics shifted again, however, in 2025 with Donald Trump’s return to the White House and renewed tariffs.
Immediate impact of tariffs on bilateral trade
The decline in German exports to the US, intensified by Trump’s imposition of tariffs, coincides with a significant growth in imports from China, which increased by more than 10% in the first half of 2025 — indicating that companies and consumers in Germany still rely heavily on the competitiveness of Chinese products.
“As the year progresses, losses in German exports to the U.S. are likely to continue and even intensify,” said Juergen Matthes, head of international economic policy at the Cologne Institute for Economic Research. German exports to the U.S. fell 3.9% to 77.6 billion euros in the first half compared to the same period last year.
US tariffs put pressure on exports, favoring Chinese imports
Commerzbank expects new U.S. tariffs to slow Germany’s exports to the U.S. by 20% to 25% over the next two years. “As a result, China is likely to regain the top spot among Germany’s trading partners over the course of the year,” Stamer said. Imports from China surged 10.7% year-on-year in the first half, reaching 81.4 billion euros. “Apparently, German companies and consumers find it difficult to replace Chinese goods,” Stamer said.
The escalation of these tariffs, particularly on automobiles and parts, has already caused a drop in German shipments to the American market. Meanwhile, in Europe, leaders are pushing for a quick agreement with the US to prevent further tariff hikes from hitting strategic sectors of the economy, such as vehicles and pharmaceuticals.
The rise may indicate China has begun redirecting trade from the U.S. to Europe, flooding the German and European market with cheaper goods, said Carsten Brzeski, global head of macro at ING. A significant undervaluation of the yuan against the euro is also making Chinese imports cheaper, said Cologne Institute’s Matthes.
Imbalance grows: falling exports and record deficit
German exports to China fell 14.2% to 41.4 billion euros, with exporters struggling amid increased competition from Chinese manufacturers. The sharp decline in exports to China, combined with surging imports, has led to a record trade deficit of 40 billion euros, second only to 2022.
Faced with this growing imbalance — with high taxes, declining exports, and rising imports — both German industry and politicians have expressed concern. It is expected that by 2025, this pattern will consolidate to balance trade flows between countries.
GCN.com/Reuters