Germany's Trade Surplus with US Hits Record High amid Tariff Threat
Germany's trade surplus with the United States surged to a record high in 2024, reaching 70 billion euros. This exceeds the previous record of 63.3 billion euros set in 2023.
The widening trade gap comes as countries anticipate the potential impact of tariffs imposed by US President Donald Trump. Trump recently raised tariffs on steel and aluminum imports to 25%, sparking concerns of retaliation from the European Union (EU).
Holger Goerg of the Kiel Institute for the World Economy warns that the surge in trade surplus could reverse if Trump enacts further tariffs on German imports. Such a move, he says, would harm Germany's economy, which is heavily dependent on trade with the US.
In 2024, German exports to the US reached a record high of 161.3 billion euros, primarily driven by automobiles and pharmaceuticals. Meanwhile, imports from the US declined by 3.4% to 91.4 billion euros.
Goerg believes the US trade deficit stems from a lack of competitiveness of American goods internationally, which tariffs will not resolve. He argues that tariffs could have a detrimental effect on US export performance.
In contrast to the trade deficit in goods, the US maintains a strong export surplus in services, including with the EU and Germany. Goerg suggests that President Trump consider this in his calculations.