US overtakes China as Germany's largest trading partner (for now)

The US surpassed China as the number one trading partner of Germany in the first quarter of 2024. For eight consecutive years, China has topped the list as number one in Germany's trade statistics. It remains to be seen whether for the whole of 2024 the US will maintain the big overtake.

Exports and imports between Germany and the US totalled EUR 63.40 billion between January and March 2024, while Germany's import-export trade with China stood at EUR 60.60 billion.

There are several reasons for the US overtaking China as Germany's number one trading partner in the first quarter of 2024: the strength of the US economy and the Inflation Reduction Act; the weakness of the Chinese economy, which imported less but kept its export level high due to low production costs and also due to dumping of sales prices; the stagnation of the German economy and Berlin's policy (actually implemented so far with little conviction) of 'derisking' from China, especially in value and supply chains.

Germany learned a hard lesson with Russia's invasion of Ukraine: trade dependency on non-democratic countries is dangerous. That is why all such dependencies of the German economy are being reduced. Many large German companies, however, continue to produce goods in large (and even growing) quantities directly in China, to sell to the Chinese. But in Germany the risk that, in the event of an escalation between China and Taiwan and the arrival of European sanctions, the German economy and the value chains exposed to the China-risk would be severely damaged is increasingly being weighed up.

The trade differential between China and Germany in 2023 was 254.4 billion, confirming Chinese goods in first place, while the import-export trade with the US was 252.6 billion (less than 2 billion gap), with the US still Germany's second largest trading partner. The distance between the two giants is minimal.