German Export Losses to US Expected to Ease in 2026 Despite Tariffs

The outlook for German exports to the United States is set to improve in 2026, with industry experts projecting a smaller decline compared to the significant losses experienced in 2025. Although the ongoing US tariff policy under the Trump administration continues to challenge German exporters, the United States is forecasted to remain the leading destination for German goods for the foreseeable future.

German export companies have faced substantial challenges due to US-imposed tariffs on European imports, particularly since August, when a 15 percent tariff was applied to most goods from the European Union. Additionally, tariffs on steel and aluminum have been raised to 50 percent, intensifying pressure on German manufacturers. While certain sectors, such as the automotive industry, have been partially exempted through negotiations by the European Commission, other key industries, notably the medium-sized mechanical engineering sector, continue to be heavily impacted.

According to Germany Trade & Invest (GTAI), the government's economic development agency, the sharp decrease in exports to the US in 2025 will moderate in the upcoming year. For 2025, GTAI anticipates an 8 to 9 percent reduction in exports of German goods to the United States compared to the previous year. This downturn is largely attributed to the heightened tariffs and their direct impact on export volumes.

Official data indicates that after a period of pronounced decline, German exports to the US began showing signs of recovery in September. However, the gap compared to the previous year remains significant, with September exports still trailing by 14 percent relative to the same month in the prior year, which was not affected by increased tariffs.

Sector representatives, particularly from the mechanical engineering industry, have called for increased diplomatic pressure from the European Union to negotiate further tariff reductions with the United States. Despite these efforts, many German manufacturers continue to face financial strain as they navigate the changing trade landscape.

Looking forward, GTAI warns that the US economy may face additional headwinds in 2026. A weakening labor market and rising inflation are expected to suppress consumer spending, which is a crucial driver of US economic growth. Furthermore, many businesses have not yet fully passed on the increased import costs to consumers, a process likely to occur in 2026, potentially affecting demand for imported goods, including those from Germany.

Growth prospects in traditional American industries such as manufacturing, agriculture, and construction remain subdued according to industry analysts, which may restrain opportunities for German exporters whose products are mainly geared toward these sectors. The key products Germany supplies to the US include pharmaceuticals and chemicals, machinery and equipment, automobiles, and electronics.

Despite the challenging environment, the United States continues to be the most significant export market for German companies, a status it has held since 2015. In 2024, German exports to the US were valued at 161.4 billion euros. Based on data available through September, GTAI projects that the 2025 figure will likely fall just below 150 billion euros.

In summary, while German exporters are expected to face ongoing challenges in the US market due to tariff barriers and economic uncertainties, the extent of export declines is anticipated to lessen in 2026. The enduring importance of the US as Germany's top export destination underscores the resilience and adaptability of German industry in the face of evolving global trade dynamics.