The close transatlantic trade relations are coming under significant strain due to US President Trump's tariff policies. This is already reflected in the export performance of German industries during the first three quarters of 2025. The German Economic Institute (IW) has published a report on German export performance to the US finding that Germany’s goods exports to its major overseas partner fell sharply in the first three quarters of the year, largely due to higher US import tariffs and sector-specific challenges.
According to the analysis, total German exports of merchandise goods to the US declined by about 7.8 percent in the first three quarters of 2025 compared with the same period in 2024, a reversal from the roughly five percent average annual growth seen between 2016 and 2024. This contraction reflects heightened tariff barriers and subsequent weak demand in key industries.
The report highlights that automobiles and automotive parts experienced the steepest drop in export value, falling by nearly 14 percent, while machinery and chemical exports also posted substantial declines of around 9.5 percent each, underlining the broad impact of the tariff regime. These three sectors collectively account for more than two-thirds of the overall export downturn to the US market. Export levels for most major sectors remain near or below their 2022 values, indicating a significant setback in trade flows after years of consistent growth.
The report attributes the export slump mainly to tariff policy on US imports - including 50 percent duties on many steel and aluminum-related products for machinery exports and elevated car tariffs - which have created a new normal in transatlantic goods trade. Unless tariff levels decrease, the study warns that a sustained recovery of German exports to the US is unlikely in the near term.
The IW analysis underscores the challenges facing German industry in maintaining global market share against protectionist trade policies and suggests continuing adjustment of export strategies and diversification of markets may be necessary to counteract the downturn.