In 2024, Germany witnessed a significant shift in its trade dynamics, with the United States surpassing China as its primary trading partner. This change is highlighted by a notable decline in German exports to China, which fell by 7.6 percent to €90.0 billion. Concurrently, imports from China decreased by a marginal 0.3 percent, leading to an increased trade deficit of €66.3 billion.
Sebastian Dullien, Director of the Institute for Macroeconomics and Business Cycle Research, attributes this decline to China's aggressive industrial policies. Under its 'Made in China 2025' strategy, China aims to dominate industries where Germany has traditionally excelled.
On the other hand, German exports to the US climbed by 2.2 percent, reaching €161.4 billion, making the US the top buyer of German goods, ahead of France and the Netherlands. However, potential challenges loom due to the trade policies of US President Donald Trump, who has proposed tariffs on auto imports that could affect German exports significantly.
Trump's tariff plans include a steep 25 percent on car imports, a significant increase from the current 2.5 percent for EU vehicles. This move aims to encourage manufacturers to relocate production to the US, affecting Germany's automotive and potentially pharmaceutical exports.
Germany's export sector is already facing headwinds, with its leading export categories—cars, machinery, and chemicals—experiencing declines. Bundeswirtschaftsminister Robert Habeck emphasized the importance of avoiding a tariff escalation spiral, advocating for a firm stance in EU-US trade relations.
These developments underscore the evolving landscape of international trade, with Germany navigating the dual challenges of shifting US policies and China's strategic ambitions.
