German Exports Decline As Tariff Treats Damp Demand From US

(RTTNews) - Germany's exports declined for the second straight month in May due to the sharp fall in demand from the US amid tariff threats, data from Destatis revealed on Tuesday.

Exports decreased by more-than-expected 1.4 percent on a monthly basis in May, following April's 1.6 percent fall. Economists had forecast a 0.2 percent drop.

Imports slid 3.8 percent from last month, in contrast to the 2.2 percent increase in April. Imports were forecast to drop only by 0.9 percent.

Due to the fall in imports, the trade surplus increased to a seasonally adjusted EUR 18.4 billion from EUR 15.7 billion in the previous month.

Year-on-year, exports advanced 2.8 percent in May, reversing a 5.1 percent drop last month and imports logged a faster growth of 6.1 percent after a 0.4 percent rise in April.

Consequently, the trade balance showed a surplus of EUR 17.6 billion in May compared to EUR 20.5 billion surplus in the same period last year.

Exports of goods to the United States decreased 7.7 percent from April, with the value of exports to the US hitting the lowest since March 2022. Shipments to China dropped only 2.9 percent, while that to the UK surged 15.1 percent.

Imports from the US slid 10.7 percent and that from China dropped 1.0 percent. By contrast, imports from the UK grew 4.0 percent.

ING economist Carsten Brzeski said the reversal of the frontloading effect is still in full swing in the export sector.

"While the EU did not receive a new tariff letter from the White House yesterday, the risk of (more) tariffs hangs like a sword of Damocles over German and European exporters," said Brzeski.

Moreover, the economist noted that the strengthening of the euro is adding to exporters' concerns.

Despite the growing optimism and signs of a cyclical turning point, the German economy will have to wait at least another quarter to present hard data that matches the improving sentiment, he added.