German Export Slump Deepens Amid Trade Headwinds and Economic Strain

Germany's export engine sputtered through 2025 as shipments to its two largest markets collapsed. Sales to the U.S. plunged 7% to under €150 billion while China deliveries cratered 10% to €81 billion, according to GTAI data. The BGA trade association sees no meaningful recovery ahead—only temporary relief at best.

U.S. tariffs on European goods have become 'sand in the gears of transatlantic trade,' says BGA president Dirk Jandura, squeezing margins for German exporters already battling a strong euro and soaring energy costs. The manufacturing PMI fell to 47.0 in December, signaling accelerating contraction as export orders declined for five consecutive months.

Factories responded with DEEP cuts—slashing inventories, reducing headcount at the fastest pace in half a year, and curtailing capital expenditures. Paradoxically, manufacturers report the most optimistic production outlook in six months, pinning hopes on new product demand and government stimulus.