View of a port with red cranes and numerous cargo containers stacked in different colors — The German economy contracted by 0.1% in the second quarter of the year following the EU's trade agreement with the US | La Derecha Diario

Camara — The German economy contracted by 0.1% in the second quarter of the year following the EU's trade agreement with the US | La Derecha Diario

The German economy suffered a contraction following fears of new U.S. tariffs.

After the United States celebrated a new trade agreement with the European Union, the German economy experienced a significant downturn in the second quarter

30/07/2025 20:01:00h

Editorial Team

Germany recorded a 0.1% economic contraction in the second quarter of 2025, according to official data published on Wednesday.

This decline is mainly attributed to a decrease in demand from the United States following several months of advance purchases by American importers who anticipated an increase in tariffs.

The drop in GDP thus reverses the growth experienced in the first quarter when fears of new tariffs boosted German exports to the United States.

Germany's gross domestic product (GDP) remains stagnant at levels similar to those prior to the COVID-19 pandemic reflecting the lack of a sustained recovery.

German flag waving in front of the Reichstag building in Berlin under a blue sky with clouds.

The German economy is still at levels similar to those before the pandemic | La Derecha Diario

The German economy, stagnant.

This contraction was due in part though not exclusively, to the decline in exports following the "front-running" tariff phenomenon in the first quarter, referring to the anticipation of purchases by importers before tariffs take effect.

In Germany's case, American companies brought forward their orders in the first quarter to avoid higher tariffs, which temporarily boosted exports. This advance demand was reversed in the second quarter, affecting growth.

In terms of GDP components, investment declined during the second quarter while both private consumption and public spending increased compared to the previous quarter.

Germany's Federal Statistical Office also revised first-quarter growth downward, from 0.4% to 0.3% which reinforces the perception that the German economy is experiencing a phase of persistent weakness.

Young woman with long, wavy hair wearing a dark jacket and white blouse, smiling in front of a blurred background

Economists warn that this decline in GDP is attributed to the decrease in exports | La Derecha Diario

German dependence.

A key factor that has influenced this scenario is the recent trade agreement between European Union and United States, where the parties agreed to impose a 15% tariff on most goods imported from the EU to the United States a figure significantly lower than the initial 30% with which Trump had threatened if no agreement was reached.

This agreement prevented a further escalation in the trade conflict, which would have had even more severe consequences for the German economy. Nevertheless, the new tariff represents a significant obstacle for the country's foreign trade.

United States was Germany's main trading partner in 2024, with bilateral merchandise trade valued at 253 billion euros. Dependence on the American market makes Germany one of the European countries most exposed to the negative effects of the new tariffs.

Two elegantly dressed people shake hands while sitting face to face in a room with flags and flowers in the background.

The United States signed a new trade agreement with the EU, which establishes a minimum tariff of 15% | La Derecha Diario

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