While Germany’s economy is sinking into the deepest mood of crisis because of the Ukraine war and rising energy costs, trade with our most important partner is booming. Never before have German companies exported goods worth 100 billion euros to a single country in such a short time.
Business in the German economy with its most important customer, the USA, is going better than ever before, despite fears of war and rising credit costs. Exports of goods to the United States already surpassed the 100 billion euro mark in August: it has never been cracked so early in the export business with a single country. Overall, German US exports grew by 27.2 percent in the first eight months compared to the same period last year to 100.2 billion euros, according to preliminary data from the Federal Statistical Office.
According to the Federal Association of Wholesale, Foreign Trade and Services (BGA), the boom is not only due to the weak euro, which is making German products more price-competitive on the US market. “Certainly the comparatively cheap euro has its share in the good business of German exporters in the USA,” said BGA President Dirk Jandura Reuters. Since the beginning of the year, the common currency has lost around 15 percent of its value against the dollar. However, the euro is also proving to be weaker than the Chinese yuan: exports to the People’s Republic increased far less strongly in the first eight months at almost five percent to almost 72 billion euros.
“Therefore, other recent developments are more important for the increase in German exports to the USA,” said Jandura. “The extensive fiscal programs of the Biden administration have boosted the economy in the USA so much that German companies are now also benefiting significantly from it.” Last year, for example, the “American Rescue Plan” worth billions was launched and an investment program of 430 billion dollars, the so-called “Inflation Reduction Act”, was recently approved. This drives the demand for goods “Made in Germany”.
“The current weakness of the Chinese economy is also encouraging reorientation movements by German companies that are reducing their export dependency on China and are once again focusing more strongly on the West,” said the foreign trade president. In addition, the suspension of mutual punitive tariffs in the Airbus-Boeing trade dispute and the suspension of the trade conflict over steel and aluminum tariffs have also contributed to the fact that the conditions for bilateral trade with the USA have improved.
Whether US business will continue to do so well in the future remains to be seen. “This positive development is still on shaky ground: the trade conflicts mentioned have only been postponed and have not yet been resolved,” warned Jandura. In addition, the next transatlantic issues were already looming, which have the potential to trigger a new wave of trade conflicts.
“On the US side, these are in particular the new provisions on tax incentives for electric cars as part of the Inflation Reduction Act,” said Jandura. Here, European manufacturers fear being disadvantaged compared to their US competition. “On the EU side, the CO2 border adjustment mechanism that has already been decided on continues to hold great dynamite for trade relations.” The BGA therefore has high hopes for the EU-US Trade and Technology Council (TTC). “It has the potential to significantly improve economic relations across the Atlantic and to defuse future conflicts,” said BGA President Jandura.
