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The United States has overtaken China to become Germany’s leading trading partner in a significant economic shift. Based on official data from the German statistics office, Reuters’ calculations reveal that trade between Germany and the U.S. reached 63 billion euros ($68 billion) in the first quarter of the year, surpassing the nearly 60 billion euros exchanged with China during the same period.
The reversal comes after China held the top position for eight consecutive years, with trade volumes reaching 253 billion euros in 2023. However, structural changes and economic dynamics have fueled this shift. Germany’s exports to the U.S. surged due to the robust American economy, while exports to and imports from China experienced declines. Commerzbank economist Vincent Stamer notes that China’s advancement up the value chain and increased domestic production of complex goods previously imported from Germany contributed to this trend. Moreover, German companies are increasingly producing locally rather than exporting goods to China.
Germany’s desire to reduce dependence on China, citing political disparities and unfair practices, has influenced this reorientation. However, Berlin’s approach to addressing these dependencies remains ambiguous, with vague policy steps outlined in its China strategy announcement. Notably, the performance gap between the U.S. and Chinese economies has played a pivotal role in this realignment. Should the U.S. administration change post-election, there’s uncertainty about sustaining this trend, mainly if market restrictions are imposed.
The declining share of China in Germany’s trade landscape is notable. Currently accounting for less than 6% of German goods exports, China’s diminishing influence contrasts with the U.S., which commands approximately 10%. This trend signals a broader geopolitical pivot away from China towards transatlantic partners, particularly the U.S., amidst global economic headwinds. However, the continuation of this trend remains uncertain, contingent on various factors including political dynamics and monetary policies.
Overall, the first quarter’s trading data underscores the evolving economic dynamics between Germany, the U.S., and China. While the U.S. has emerged as Germany’s top trading partner, the long-term sustainability of this shift hinges on geopolitical developments, economic policies, and global market forces. Germany’s recalibration of trade priorities reflects broader global trends reshaping economic relationships in an era of geopolitical uncertainty.
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