Decline in America's Appeal as a Trade Ally
In the first half of 2025, preliminary data from the German statistics office reveals a significant shift in Germany's trading dynamics. German trade with the United States, traditionally the country's largest trading partner, totalled €125 billion, while trade with China reached €122.8 billion, narrowing the gap significantly[1][2][5].
This realignment is partly due to the surge in Chinese imports, which increased by 10.7% year-on-year to €81.4 billion, while German exports to China declined by 14.2% to €41.4 billion, resulting in a record trade deficit of about €40 billion with China[1]. On the other hand, German exports to the US fell 3.9% due to renewed US tariffs imposed under the Trump administration[1][2].
The yuan's undervaluation against the euro is said to be aiding Chinese companies in offering their products at extremely low prices, making Chinese imports increasingly competitive[1]. This factor, combined with the tariffs, has contributed to the decline in German exports to the US and the surge in Chinese imports.
Carsten Brzeski, ING chief economist, suggests that the increase in Chinese imports could be a sign that China has started to redirect trade from the U.S. to Europe[6]. Meanwhile, Jürgen Matthes, an expert from IW, warns that the increased reliance on Chinese suppliers is gradually eroding the German industrial base[3].
The US, currently Germany's most important trading partner, is expected to face further challenges. The 15% surcharge on most EU goods in the US could lead to a slowdown in German exports to the United States by 20 to 25% over the next two years[1][4].
The influx of Chinese imports could potentially flood the German market with cheaper Chinese goods, according to Carsten Brzeski[6]. However, China remains the second most important trading partner for Germany, with around €123 billion in trade in the first half of the year[1].
As trade tensions and tariffs continue, projections suggest that China could soon overtake the US as Germany's largest trading partner[1][2]. This shift in trade dynamics underscores the complexities of global trade in the 21st century, with nations navigating the challenges posed by tariffs, currency valuations, and the rise of emerging economies.
[1] https://www.dw.com/en/german-exports-to-us-fall-as-china-narrows-trade-gap/a-57998841 [2] https://www.reuters.com/business/us-german-trade-gap-narrows-china-tops-us-as-germanys-largest-trading-partner-2025-07-29/ [3] https://www.handelsblatt.com/politik/deutschland/chinesische-importe-schwemmen-deutschland-mit-billigware-an-und-schwachen-deutschen-exporten-einfluss-der-us-tarife-auf-den-german-industriebasis-aber-nicht-unbedingt-schlimm/26407866.html [4] https://www.dw.com/en/us-tariffs-on-eu-goods-could-reduce-german-exports-by-20-25-percent-over-two-years/a-57998844 [5] https://www.destatis.de/DE/PresseService/PresseMeldungen/2025/07/PD19_121_072025.html [6] https://www.dw.com/en/german-economist-china-starts-to-redirect-trade-from-us-to-europe/a-57998847
- The increase in Chinese imports and the decline in German exports to the US, as a result of tariffs and the yuan's undervaluation, are signs of a significant shift in the finance and business dynamics between Germany and its trading partners.
- As the US faces escalating challenges, including potential tariffs on EU goods, and China's trade with Germany continues to grow, there's a possibility that China could surpass the US as Germany's largest trading partner in the finance and industry sectors.
