Trade between the US, China, and German economies only got worse in 2025

Trade between Germany, the U.S., and China got wrecked in 2025, thanks mostly to the sick man of Europe, according to a report by the BGA trade group on Friday.

Germany’s two biggest export markets turned into deadweight, and the BGA doesn’t think that 2026 will offer much help. “We do not see a turnaround, but at best a brief respite,” said Dirk Jandura, president of BGA.

German exports to the U.S. dropped more than 7%, sinking below €150 billion (about $156 billion). China hit harder, with German exports falling 10% to just €81 billion, based on numbers from GTAI.

U.S. tariffs and German factory cuts drag numbers down

BGA’s Jandura said U.S. tariffs on European goods acted like “sand in the gears of transatlantic trade,” cutting into profits and pushing up costs. German exporters lost room to breathe. At the same time, the country’s economy faced a combo of deeper issues: a strong euro, high energy prices, too much red tape, and low investment.

Germany’s HCOB PMI for manufacturing dropped to 47.0 in December, down from 48.2 in November, and anything under 50.0 means shrinking activity, according to the S&P Global.

Export sales also fell for the fifth month in a row, crashing at the fastest rate since December 2024, along with production numbers.

German companies cut purchases, inventories, and even staff. Job losses reached the worst pace in six months. But strangely, manufacturers kept their hopes up. Their outlook for production hit a six-month high, mostly because they’re betting on demand from new products and government spending on defense and infrastructure.

China exports are just as bad

Things in China didn’t go any better, where the government backed homegrown producers in 2025, slashing the need for German imports.

Because of that, sectors like automotive, mechanical engineering, and chemicals, where Germany usually leads, got hit the hardest. Local competitors are taking over. “This often stabilizes global sales, but leads to fewer exports from Germany,” Jandura said.

So German companies are adjusting. More of them are building inside China instead of shipping goods in. Some are even taking their money to other Asian markets instead.

Meanwhile, President Xi Jinping was telling his people that China achieved 5% GDP growth in 2025. Jinping said:-

“China’s economy is forging ahead under pressure, moving toward innovation and quality, demonstrating strong resilience and vitality. The growth rate is expected to reach around 5%, continuing to rank high among the world’s major economies.”

Whether anyone outside China buys that spin is a different matter. But one thing’s for sure: Germany’s exporters aren’t seeing that growth in their order books.