China replaced the United States as Germany's largest trading partner in the first eight months of 2025, according to data from Germany's Federal Statistical Office.

Analysts say the shift reflects the growing impact of US tariffs and trade barriers, which are straining transatlantic economic ties and weakening Germany's export momentum.

From January to August, Germany's exports to the US totaled 101 billion euros ($117.18 billion), down 6.5 percent from a year earlier. Exports in August alone fell 20.1 percent year-on-year to 10.9 billion euros, the steepest decline since November 2021. Imports from the US reached 63.4 billion euros, bringing total bilateral trade to 164.4 billion euros. By contrast, trade between Germany and China proved more resilient, rising to 166.3 billion euros during the same period.

Under a trade deal that took effect on Aug 1, the US imposed a 15 percent tariff on most European Union exports. Dirk Jandura, president of the Federation of German Wholesale, Foreign Trade and Services, said the US tariff policy was a key factor behind the slump in exports, noting that demand for German-made cars, machinery and chemicals had dropped sharply.

According to the Association of the German Chambers of Commerce and Industry, more than half of the German firms it polled plan to scale back trade with the US, and roughly a quarter expect to suspend or cancel investment projects there. Economist Hermann Simon said US tariffs have created serious challenges for German exporters, warning that companies losing market share in the US will have to explore other regions to sustain growth.

The automotive industry, long a pillar of Germany's trade surplus with the US, has been hit hardest. Since Washington raised tariffs on imported vehicles and related products in April, German car exports have come under sustained pressure.

A report by consulting firm EY showed that the country's automotive sector shed about 51,500 jobs over the past year ending June, nearly 7 percent of its workforce. German media reported that higher tariffs have driven up prices for German cars and parts in the US, prompting Mercedes-Benz, Volkswagen, Bosch, Continental and others to roll out sweeping cost-cutting plans.

The pressure has rippled across other industries. DHL said it would lay off about 8,000 employees by the end of the year, Siemens plans to cut 6,000 jobs by 2027, and Thyssenkrupp Steel and Bosch have announced deeper workforce reductions by the end of the decade.

Rising costs and shrinking demand have also pushed up business insolvencies. The association said corporate bankruptcies in July hit their highest level in 12 years, with more than 22,000 filings expected this year — an average of more than 60 per day.

Bundesbank President Joachim Nagel warned that US tariffs and policy uncertainty are undermining Germany's fragile industrial recovery. The ifo Institute, a German economic think tank, forecast that the German economy will grow only 0.2 percent in 2025, citing the prolonged drag from tariffs and weak global demand.

Xinhua - China Daily