German Exports Fall More Than Expected As US Shipments Sink
Imports sank 3.8%, including a more than 10% drop in sales from the US.
German exports sank more than anticipated in May as the value of shipments to the US plunged to their lowest level in more than three years amid President Donald Trump’s tariff threats.
Total exports declined 1.4% from the previous month, the statistics office said Tuesday. That’s worse than the -0.5% median estimate in a Bloomberg survey, and followed a revised 1.6% decline in April.
Imports sank 3.8%, including a more than 10% drop in sales from the US. The trade balance increased to €18.4 billion ($21.6 billion) from a revised €15.7 billion.
“The reversal of the front-loading effect is still in full swing in the export sector,” said Carsten Brzeski, global head of macro at ING, referring to firms and exporters front-running US levies at the start of the year, supporting growth.
The risk of tariffs “hangs like a sword of Damocles over German and European exporters,” he said. “And there is more: the strengthening of the euro, not only vis-à-vis the US dollar but also in nominal effective terms, is adding to exporters’ concerns.”
The European Union is seeking a preliminary trade deal with the US this week that would allow it to lock in a 10% tariff rate beyond an Aug. 1 deadline as the two sides hammer out a permanent agreement. Trump on Monday unveiled the first in a wave of promised letters that threaten to impose higher levies on key partners, but pushed off increased duties until at least next month.
Germany is seen as particularly vulnerable to US tariffs and is still currently subject to sectoral levies on things like cars. Bundesbank President Joachim Nagel has even warned that Europe’s largest economy is in danger of suffering a recession due to the tariff fallout.
At the same time, plans by the new government to massively boost defense and infrastructure outlays have brought some optimism.
Gross domestic product grew more than anticipated at the start of the year, but views differ as to whether momentum will fade or turn into a sustainable recovery. The 0.4% growth between January and March was partly down to firms and exporters front-running US levies, though private consumption and investment also surged.
Data on Monday showed industrial production unexpectedly rose in May, underpinning hopes that the economy can emerge from years of stagnation. A release Friday, however, showed factory orders dropped 1.4% in May — more than anticipated and the first decline in four months.
