US-Germany trade deficit increases, signifying a reversal in their trade balance
In the first half of 2025, the United States imposed a 15% tariff on most European Union exports, including German goods. Although this tariff increase was significant, the overall effect on the EU's GDP growth is expected to be minimal.
The automotive sector, a cornerstone of the German economy, has been particularly affected by these tariffs. While the tariff on automotive imports was reduced to 15% from 25% earlier in the year, it remains much higher than the pre-tariff level of 2.5%. This sustained tariff level likely constrained German auto exports to the US and thus economic growth in that sector.
The US trade deficit overall narrowed in June 2025, but data does not specifically break down Germany’s trade balance with the US. However, tariffs contributed to a reduction in US imports, which indirectly suggests lower US import demand for German goods, impacting Germany’s trade surplus with the US in the first half of the year.
Economically, Germany, as a large trade-dependent European economy, is estimated to face up to a 1% economic loss due to these tariffs. The tariffs also have ripple effects via global value chains, making supply chains more costly and complex for German firms.
Despite these challenges, "Made in Germany" goods remain in demand in the US market. The People's Republic of China remains the largest importer of goods to Germany in the first half of the year, with a 10.7% increase in imports. The US remains the second-largest customer for German goods, with exports worth 77.6 billion euros, a 3.9% decrease from the same period in 2024. However, Germany still has a trade surplus with the US, with exports exceeding imports by 30.2 billion euros between January and June.
France and the Netherlands follow the US and China as Germany's major trading partners, with France's trade surplus decreasing by 2.3 percent, and the UK's trade surplus decreasing by 10.8 percent. Poland takes fourth place in trading partners with Germany, with exports of 49.4 billion euros, a 5.6% increase.
Recently, the US and EU reached a new trade deal in July 2025, which includes commitments on investment and reducing some tariff barriers. This could help stabilize the trade relationship and mitigate longer-term economic damage.
In summary, the US tariffs in the first half of 2025 caused mild negative effects on Germany’s trade balance and economy, particularly in the automotive sector, with an estimated economic impact around 1%. The broader EU economy remains resilient, while the new trade deal aims to reduce uncertainty and tariff pressures going forward.
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