US and German flags are on the table at a bilateral meeting between German Economy Minister Habeck and US Secretary of State Blinken at a hotel in Gendarmenmarkt. Photography: Christoph Soeder/DPA (Photo by Christoph Soeder/Photo Alliance via Getty Images)
Christoph Soeder / German Press Agency | Image Alliance | Getty Images
After years of China being Germany's main trading partner, the United States appears to be quietly assuming that top spot as the year progresses.
Exports and imports between Germany and the United States totaled 63 billion euros ($68 billion) between January and March of 2024. Meanwhile, trade between Germany and China reached just under 60 billion euros, according to CNBC calculations. Reuters first reported the change on Thursday.
Several factors played a role in the change, Carsten Brzeski, global head of macro research at ING Research, told CNBC.
“This shift is the result of several factors: strong growth in the United States has boosted demand for German products. (…) At the same time, decoupling from China, weak domestic demand in China, and China’s ability to produce goods it previously imported From China. Germany reduced (mainly cars) German exports to China.”
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 long been a larger market for German exports than China, Holger Schmieding, chief economist at Berenberg Bank, told CNBC.
He noted that while the US share of German exports has been increasing in recent years, China's share is decreasing. “The Chinese economy is faltering and German companies face stiffer competition from subsidized Chinese companies,” Schmieding said.
He pointed out that the main difference is that the United States is now more important when it comes to imports.
Germany is pursuing a new strategy towards China, urging companies to “de-risk” China last year. The Chinese government has stressed that China will remain a partner of Germany, and there should be no “disengagement” – but “systemic rivalry” has increasingly characterized the relationship between the two.
Tensions have also increased between the European Union and China, with both launching investigations into each other's trade practices and threatening to impose tariffs on imports.
Last month, a survey by the German Ifo economic institute found that the number of companies saying they depend on China fell from 46% in February 2022 to 37% in February 2024. This is linked to a decline in the number of companies that rely on Chinese inputs. The report said that manufacturers.
“The fact that the United States has become Germany's largest trading partner already demonstrates the changing trade patterns and gradual decoupling from China,” Brzeski said.
