Germany’s export-driven economy is facing renewed headwinds, with official data showing near-stagnation in October 2025.
Total exports rose by just 0.1% month-on-month, a sharp slowdown from September’s 1.4% gain, signaling that the brief post-summer rebound has fizzled out.
This sluggish performance underscores broader challenges, including U.S. tariffs, Chinese overcapacity, and shifting global supply chains, which are dampening prospects for an export-led recovery.
Exports to the United States—Germany’s largest single-country market—plummeted nearly 8% in October, exacerbating a downward trend. This follows earlier drops, such as 7.7% in May and 10.5% in April, largely attributed to a 15% U.S. tariff on EU goods implemented in July 2025.
Analysts note that while companies initially “frontloaded” shipments to dodge the tariffs, the reversal has now fully materialized, with no near-term EU-U.S. trade deal in sight. Overall, U.S.-bound exports remain down year-on-year, despite a temporary rebound in September.
Shipments to China fell almost 6% in October, hit by Beijing’s economic slowdown and rising domestic competition that favors local brands over German imports. This “triple China shock”—weaker demand, increased rivalry in third markets including the EU, and reliance on Chinese rare earths—has intensified uneven trade dynamics.
Meanwhile, imports from China to Germany surged over 10% this year, highlighting competitive strains. Broader global export volumes have been treading water since the pandemic, with supply chain disruptions and geopolitical fragmentation adding drag.
Bright Spots in Europe
Intra-EU trade provided some offset, with exports to other European countries jumping nearly 3%. However, economists warn this regional resilience is insufficient to counter global pressures, leaving the European market unable to fully compensate.
The data points to ongoing stagnation for Europe’s largest economy, with exports unlikely to drive growth in the near term. Germany’s trade surplus widened slightly to €16.9 billion in October, buoyed by a 1.2% drop in imports, but the overall picture is one of vulnerability.
Fiscal stimulus, including €52 billion in pending military procurement, could offer a buffer, but risks from U.S. policy under a potential Trump administration and China’s slowdown loom large. Looking ahead, about 80% of German exporters anticipate further sales declines in 2025, potentially leading to job cuts in export-reliant sectors like automotive and machinery.
This trend aligns with a modest global slowdown in 2025, where resilience in services and domestic demand hasn’t fully translated to goods trade. For context, Germany’s total exports for the first nine months of 2025 reached €1.18 trillion, up just 0.7% from 2024—far below pre-pandemic levels.
Germany’s automotive industry, a cornerstone of its export economy contributing over 5% to GDP and employing around 800,000 people pre-crisis, is reeling from the dual blows of U.S. tariffs and China’s economic slowdown.
As global exports stagnate—particularly to the U.S. down ~8-9% year-to-date and China down nearly 6% in October—the sector faces profit erosion, massive job cuts, and a painful pivot toward electrification amid fierce Chinese competition.
Analysts forecast a 1.7% contraction in global motor vehicle production this year, heavily influenced by these trade frictions. The sector’s workforce has shrunk dramatically, signaling long-term pain beyond cyclical downturns.
As of September 2025, employment in automotive manufacturing and parts stood at 721,400—a 6.3% drop (48,700 jobs) from the prior year and the lowest since mid-2011. This marks the steepest decline among Germany’s major industrial sectors.
Broader figures paint an even grimmer picture: 51,500 auto jobs were slashed between June 2024 and June 2025 alone, with total employment now 112,000 below 2019 pre-COVID peaks. Across the industrial base, 114,000 positions evaporated in the same period.
These cuts stem directly from export woes: U.S.-bound car and parts shipments fell 8.6% in the first half of 2025, while China’s “triple shock”—weak demand, overcapacity flooding third markets, and supply chain dependencies—has eroded competitiveness.
Chip shortages, exacerbated by U.S.-China disputes, have further idled factories. Major players like Volkswagen, BMW, and Mercedes have announced restructuring, with warnings of more layoffs if tariffs persist into 2026.
Earnings reports from Germany’s “Big Three” automakers highlight the financial carnage. Mercedes-Benz saw first-half 2025 net profits crater 56% to €2.7 billion from €6.1 billion in H1 2024, with Q2 alone down 69%; revenue dipped 10%, and EBIT fell 68%.
The company attributes €360 million of this to U.S. tariffs—initially 27.5% on EU vehicles, later negotiated to 15%—plus one-off costs from its cost-cutting overhaul. China, Mercedes’ top market, saw sales plunge nearly 20% year-on-year in Q2, hammered by affordable domestic EVs from BYD and others.
VW’s nine-month profits dropped amid U.S. tariff hits and Chinese market share erosion, while BMW cited similar pressures despite resilient margins. Overall, U.S. tariffs have already cost major global automakers $11.7 billion through mid-2025, with Germany’s exposure acute given the U.S. absorbs ~10% of its auto exports.
Porsche, too, reported squeezes from the 27.5% Q2 tariff rate before the partial EU-U.S. deal. While U.S. tariffs grab headlines, China’s woes pose an existential risk. German brands lost ground as Beijing’s EV boom favors locals.
Chinese-made cars now hold 5.5% of Europe’s market double from 2024, despite EU countermeasures up to 45% tariffs. In China itself, demand for German luxury and combustion-engine vehicles has softened amid economic malaise and subsidies for domestics.
Exports to China fell 6% in October, part of a broader “China shock” pummeling Germany’s “Mittelstand” suppliers. This has forced a scramble: BMW’s CEO recently urged an EU-U.S. trade deal to offset losses, while firms eye deeper localization in China or diversification to India and Southeast Asia.
The automotive slump ripples through Germany’s economy, dragging on mechanical engineering and machine tools—evident in Swiss suppliers like Pfiffner reporting order drops from German clients.
Domestically, EV adoption offers glimmers: Germany’s new-car market eyes full-year growth, buoyed by electric registrations, but overall volumes lag pre-pandemic norms. Yet, with 80% of exporters bracing for further 2025 declines, risks mount from potential Trump-era escalations and China’s property crisis spillover.
Fiscal aids like €52 billion in defense spending provide some insulation, but without trade breakthroughs, the sector could shed another 50,000 jobs by mid-2026. Transitioning to EVs remains key, though Chinese dominance in batteries and components complicates this. For now, Germany’s auto titans are in survival mode, underscoring the fragility of its export model in a fragmenting world.
