Germany is used to managing export trouble one market at a time.
In 2025, it did not get that luxury.
As shipments to the United States fell sharply — and exports to China weakened at the same time, according to trade data — the country's export-driven economic model came under rare, simultaneous pressure, pushing Germany towards a record trade deficit with China of almost €90 billion and exposing the growing fragility of its global trade position.
“The close transatlantic trade relationship is coming under significant strain due to US President Trump’s tariff policy,” the German Economic Institute (IW) writes in a new study funded by the Federal Foreign Office.
“This is already reflected in the export performance of German industries during the first three quarters of 2025.”
According to the report, German exports to the United States fell by 7.8% in the first three quarters of 2025 compared with the same period a year earlier — a sharp reversal from the average annual growth of nearly 5% recorded between 2016 and 2024.
The decline was concentrated in the industrial heart of Germany’s export machine.
“German exports of motor vehicles and parts, machinery and chemical products — together accounting for more than two-fifths of German exports to the US — are particularly hard hit,” the study stated.
Combined, these three sectors alone have dragged Germany’s exports to the US down by more than 5.2 percentage points compared with the previous year, representing more than two-thirds of the overall decline.
The collapse in exports to the US was driven largely by President Donald Trump’s renewed tariff offensive after his return to office.
German automotive exports to the US fell by 14%, while machinery exports dropped by 9.5% as tariffs of up to 50% were imposed on steel, aluminium and related products.
The report warned that, since US import tariffs are unlikely to return to previous levels anytime soon, export performance in the third quarter of 2025 may reflect a “new normal” for German trade with the United States.
While overall German exports rose slightly in nominal terms during the first three quarters of the year, the study makes clear that this masks a worrying loss of competitiveness. In key sectors, export volumes have been pushed back several years.
In important industries, German exports to the US have been pushed back to levels seen in 2022 or even early 2019.
The report, authored by Dr. Samina Sultan, senior economist at the IW, concluded that Germany can no longer rely on a rebound in its traditional export markets. Instead, it calls for urgent diversification and deeper integration within Europe.
The study argued that Germany must invest more strongly in expanding alternative export markets while dismantling remaining barriers inside the EU single market and accelerating free trade agreements with third countries.
At the same time, Germany has been hit by a second, more structural shock from China.
While the US decline 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 German imports from China continue to rise, exports in the opposite direction are shrinking, driving the trade deficit towards historic highs.
China is set to drop out of Germany’s top five export markets for the first time since 2010.
Exports are projected to fall by around 10% this year to approximately €81 billion, according to Germany’s trade and investment agency, Germany Trade & Invest (GTAI).
That decline would leave China only seventh among the most important destinations for German goods — a striking reversal for a market that has dominated Germany’s export landscape for more than a decade.
While the fall in exports to the United States is largely linked to President Donald 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 increasingly competing at the same level.
As Beijing pushes for greater self-sufficiency and domestic production, German exporters are finding it harder to defend market share in what was once their most important growth market.