Germany's Surplus declines in July amid U.S. tariffs: Image credit: Business Recorder
(The Post News) – Germany’s trade surplus in foreign trade declined in July as exports dropped more steeply than imports, official figures showed on Monday, thanks to new U.S. tariffs leading to a high level of demand for German exports.
Exports dropped 0.6% on last month in July, reversing June’s increase of 1.1%, while imports dropped by 0.1% after a rise of 4.1% the month before, Destatis, the federal statistics agency, said.
The result was a €14.7 billion trade surplus, down from the €15.4 billion in June and below expectations of the same figure from forecasters. It was the lowest since September 2024 and compared with a €21.1 billion surplus in July 2024.
Sales to the United States declined by 7.9%, lowering overall exports to non-EU countries by 4.5%. In July, Washington had imposed a 15% tariff on imports from the EU as part of an agreement to prevent a broader trade war.
Its largest bilateral trade partner was the United States in 2024, with two-way merchandise trade worth €253 billion ($297 billion). Economists warn that the export-led German economy will, for months to come, feel the sting of the tariffs.
In contrast, exports to EU partners rose 2.5%, and imports increased 1.1%. The share of Central and Eastern Europe in German exports was a record 12%, suggesting sturdier intra-EU trade is making up for the U.S. downturn partly.
Germany Investor Sentiment Weakens
Despite this, eurozone investor confidence was at an April low in the latest Sentix survey, with Germany seeing its steepest dive.
“Economic concerns are back in full force,” Sentix stated.
One independent set of data provided a more positive tone: Industrial production in Germany rose 1.3% in July, topping expectations for a 1.0% increase. However, on a three-month basis, output remained in decline by 0.1%, showing persistence in weakness.
ING economist Carsten Brzeski quoted optimism regarding a cyclical upturn remains intact despite declining orders, which fell 2.9% in July, the third consecutive month of declines.
Commerzbank expects production to pick up in the second half of this year on rate reductions by central banks and German fiscal stimulus. “Even a soft August reading would likely be due to factory holidays booked late in the auto industry,” said senior economist Ralph Solveen.
Current Account Surplus Narrows
Germany’s current account surplus dipped to €14.8 billion in July from €18.8 billion during the same month a year ago. The goods surplus declined to €16.4 billion as imports rose 7.2% to €102.0 billion, faster than a 2.0% increase in exports to €118.4 billion.
The services deficit widened minimally, but higher primary income partially made up the difference. During the first seven months and the first seven months of last year, the current account surplus narrowed to €125.4 billion from €163.1 billion.
Germany’s current account surplus is predicted by Trading Economics to rise to €26.3 billion by the end of Q3 2025, before declining in 2026.
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