China narrows gap with US as Germany’s biggest trading partner

BERLIN: 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.

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Germany's trade with the US slightly leads China's, but new US tariffs are expected to reduce German exports.
Chinese imports to Germany are rising sharply, driven by cheaper goods and a weaker yuan.
Germany faces a growing trade deficit with China, worsening its industrial slowdown and economic challenges.

German imports and exports with the U.S. totalled 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. The EU’s trade deal with the U.S. in July set tariffs at 15% for most 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.

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.

CHINESE IMPORTS SURGE

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 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.

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.

“All these developments are damaging the German economy and further exacerbating the industrial crisis,” Matthes said.