China is on the verge of surpassing the United States as Germany’s largest trading partner, according to preliminary data from the German statistics office for the first half of 2025. Although the US remains the largest trading partner for now, its lead over China has dwindled to a razor-thin margin. In the first half of 2025, total trade between Germany and the US reached approximately €125 billion ($145 billion), while trade with China reached €122.8 billion ($143.06 billion), just €2.2 billion (nearly $2.5 billion) less.

Germany’s trade landscape has shifted dramatically over the past year. After the US overtook China in 2024, ending an eight-year streak for China as Germany’s biggest trading partner, German exports to the US have declined, largely due to the impact of renewed US tariffs under former President Donald Trump’s administration. Meanwhile, imports from China surged by 10.7 per cent in the first half of 2025, crossing the €80 billion ($93.20 billion) threshold.

US exports to Germany hit by tariffs

Germany’s exports to the US fell by 3.9 per cent to €77.6 billion in the first half of 2025, continuing a trend of decline that began with the reinstatement of tariffs. Economists predict that new tariffs introduced by the US are expected to slow Germany’s exports to the US by 20 per cent to 25 per cent over the next two years. This decline has left Germany with fewer opportunities to strengthen its trade ties with the US, which was once the country’s most important market. With the US imposing a 15 per cent tariff on most products as part of the July EU-US trade agreement, experts warn that the ongoing losses in German exports to the US are likely to intensify as the year progresses.

China seeks to fill the void left by the US

Imports from China, meanwhile, have continued to rise. German companies appear to be increasingly reliant on Chinese goods, as evidenced by the 10.7 per cent increase in Chinese imports. The surge in imports suggests that China is effectively redirecting trade from the US to Europe. Additionally, a significant undervaluation of the yuan against the euro is making Chinese goods more affordable, further fuelling the influx of Chinese products into the German market.

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However, exports to China have been less favourable. German exports to China fell 14.2 per cent to €41.4 billion ($48.23 billion) in the first half of 2025, as Chinese manufacturers intensified competition. This imbalance has led to a record trade deficit of €40 billion ($46.6 billion) with China, second only to the deficit recorded in 2022. Despite this, analysts predict that the trade deficit could worsen as China continues to capture a larger share of the European market.

The broader global impact

The shifting dynamics between Germany, the US, and China are a reflection of broader global trade realignments. Under Trump, the US introduced tariffs that disrupted international trade and forced countries to adjust. With the World Trade Organization (WTO) forecasting a decline in global merchandise trade in 2025, and North America facing a significant downturn in exports, global markets are feeling the strain. The WTO also warned that further escalation of trade tensions could exacerbate these declines, hurting vulnerable economies around the world.

(With inputs from agencies)