For many years, it was the pride of German politics: Germany is the world champion of exports. No country exported more goods abroad than Germany. This was due to the Euro, which denied its trading partners in the Euro zone the opportunity of devaluation; the Agenda 2010 under the Schröder government, which led to a minimum wage; and the procurement of cheap Russian energy. However, the German business model collapsed with the abandonment of the latter. It does not help that points one and two still persist.
German exports have fallen again in 2024, with a decline of 1.3 percent. This is the second consecutive decline and thus a novelty in the history of the Federal Republic. Meanwhile, the demand from the EU remains high. A part of the German crisis is being exported and is thus destroying production capacities in EU countries outside of Germany – thanks to the Euro! By the end of 2024, the export to EU countries increased. What might sound like a good news for Germany is a bad news for the Euro countries and the stability of the EU.
The demand for German goods from China has significantly decreased. As a reason, a supposed growth weakness of China is being cited. However, China’s economy grew by five percent in 2024. It is more likely that China has drawn the corresponding conclusions from the increasingly sharp rhetoric of the German Foreign Minister and is diversifying its supply chains and setting up production in the country. In many areas, Germany has already lost its market leadership.
Especially alarming: The trade surplus with the US increased again in 2024 and reached a record high of 71.4 billion euros. This is fuel for the fire of Donald Trump. Trump intends to impose tariffs on the EU as well. The trade surplus of Germany supports his argument.
In general, trade relationships are considered healthy when the trade balances are roughly in balance. Trump’s argument is therefore fundamentally not wrong. The dispute over the trade surplus of Germany against the US is also no new topic. Already, Obama had complained to then-Chancellor Merkel that Germany was living under its own conditions. Merkel rejected the criticism and claimed that the strength of the German economy was due to the quality of German products and the genius of German engineers.