The flags of the United States and Germany are on the table during a bilateral meeting between German Economy Minister Habeck and US Secretary of State Blinken at a hotel in the Gendarmenmarkt. Photo: Christoph Soeder/dpa (Photo by Christoph Soeder/photo alliance via Getty Images)
Christoph Soeder/dpa | Alliance in pictures | Getty Images
After years of China being Germany’s largest trading partner, the United States appears to be gradually taking that top spot as the year goes on.
Combined exports and imports between Germany and the United States totaled 63 billion euros ($68 billion) between January and March 2024. Meanwhile, trade between Germany and China rose at just under 60 billion euros, according to CNBC calculations. Reuters first reported the change on Thursday.
Several factors played a role in this shift, Carsten Brzeski, global head of macro research at ING Research, told CNBC.
“This change is the result of several factors: strong growth in the United States has stimulated demand for German products. (…) At the same time, decoupling from China, weaker domestic demand in China and China being able to produce goods from where it previously imported Germany (mainly cars) has reduced its exports to China,” he said.
China has been Germany’s largest trading partner for years, but the gap between China and the United States has narrowed in recent years. The United States has also long been a more important market for German exports than China, Holger Schmieding, chief economist at Berenberg Bank, told CNBC.
While the U.S. share of German exports has increased in recent years, China’s share has declined, he noted. “The Chinese economy is shaky and German companies face tougher competition from subsidized Chinese companies,” Schmieding said.
The main difference is that now the United States is also becoming more important when it comes to imports, he pointed out.
Germany is pursuing a new strategy toward China, urging companies to “de-risk” China last year. China must remain a partner of Germany, the country’s government has stressed, and there should be no “decoupling” – but a “systemic rivalry” increasingly characterizes the relationship between the two.
Tensions have also increased between the European Union and China, with both countries launching investigations into each other’s trade practices and threatening to impose tariffs on imports.
Last month, a survey by German economic institute Ifo found that the number of companies reporting dependence on China fell from 46% in February 2022 to 37% in February 2024. This is because fewer Companies depend on Chinese inputs. manufacturers, the report said.
“The fact that the United States has become Germany’s largest trading partner indeed illustrates the changing trade structures and the gradual decoupling from China,” Brzeski said.
cnbc
