German economy has witnessed a sharp decline in the German exports to the United States in 2025, largely attributed to U.S. tariffs imposed under President Donald Trump’s administration.
A December 2025 study by the German Economic Institute (IW), commissioned by the German Foreign Office and reported widely including by Reuters and Xinhua, found that overall German exports to the U.S. fell by approximately 7.8% year-on-year in the first nine months of 2025.
This reversed years of steady growth averaging nearly 5% annually from 2016–2024. Automotive— motor vehicles and parts: down ~14%, hardest hit, accounting for nearly half of the global export decline in this sector for Germany.
Mechanical engineering/machinery: down 9.5% impacted by 50% U.S. tariffs on steel and aluminum inputs. Chemicals: down 9.5% partly due to tariffs, but also domestic factors like high energy prices.
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These three sectors alone contributed over two-thirds of the total decline. Monthly exports to the U.S. showed volatility, with front-loading boosts early in the year like +8.5% MoM in February ahead of tariffs, followed by sharp drops, five consecutive monthly declines from April to August, hitting a low of €10.9 billion in August—a 4-year low.
By October 2025, exports to the U.S. were €11.3 billion down 7.8% MoM from September and 8.3% YoY. The tariffs stemmed from Trump’s “America First” policy, starting with higher rates, like 25% on vehicles initially, 50% on steel/aluminum, later moderated to a 15% baseline on most EU goods via an August 2025 EU-U.S. agreement.
Despite this partial relief, the elevated duties raised costs, reduced competitiveness, and prompted some price increases or production shifts by German firms like Volkswagen, BMW, and Mercedes-Benz.
Economists note this represents a “new normal” for transatlantic trade, with limited prospects for quick recovery unless tariffs are rolled back—unlikely in the near term. Germany has partially offset losses by increasing exports to markets like China, but the U.S. remains a critical partner despite the downturn.
The sharp decline in German exports to the United States—down 7.8% year-on-year in the first nine months of 2025—has significant ripple effects across Germany’s export-dependent economy, exacerbating existing challenges like high energy costs and weak global demand.
Germany, already contracting in 2023 -0.3% and 2024 -0.2%, faced forecasts revised to zero growth or slight contraction in 2025 directly due to U.S. tariffs. The government and leading institutes like ifo and Bundesbank cited tariffs as the primary drag, potentially marking a historic third consecutive year without growth.
Analysts estimated tariffs shaved 0.1–0.3 percentage points off GDP, with risks of a “slight recession” if duties persisted. The hardest-hit sectors—autos (14% drop), machinery (9.5%), and chemicals (~9.5%)—accounted for over two-thirds of the total export decline.
These industries employ millions and drive innovation; reduced U.S. demand led to margin compression, potential layoffs, and scaled-back investments. German automakers absorbed higher costs or passed them on, eroding competitiveness.
Germany partially offset U.S. losses by boosting exports to markets like China +5.4% in some months and non-EU countries overall. However, simultaneous weak demand from China compounded pressures on the export model.
Experts from the German Economic Institute (IW) described Q3 2025 export levels as a likely long-term baseline, assuming no major tariff rollback. The August 2025 EU-U.S. deal moderated duties to 15% on most goods with higher rates on steel/aluminum at 50%, but this still represented the most restrictive transatlantic regime in decades.
Tariffs highlighted vulnerabilities in Germany’s export-led growth, prompting calls for diversification to India, South America, reduced intra-EU barriers, and a shift toward services. Some forecasts suggested medium-term reallocation from industry to less tariff-sensitive sectors.
The policy contributed to broader protectionism concerns, disrupting supply chains and raising bureaucratic hurdles like the origin rules risking 200% punitive duties. While Germany suffered disproportionately as the U.S.’s largest EU trading partner, retaliatory risks loomed if negotiations failed.
While not catastrophic, the tariffs reinforced Germany’s economic fragility in 2025, delaying recovery and underscoring the need for adaptability in a more fragmented global trade environment. Limited prospects for quick U.S. relief suggest ongoing challenges into 2026.