May 12, 2024 | China Dethroned as Germany’s Largest Trading Partner

The United States has surpassed China to become Germany’s largest trading partner. Trade between the US and Germany came in at $68 billion (63 billion euros) during Q1, compared to about 60 billion euros between China and Germany.

If we look at these figures, they pale in comparison to the aid packages we are sending foreign nations. It is appropriate to put these numbers into perspective to understand the true economic unruliness of these proxy wars.

Now, the United States has not become more competitive, and there is a known lag in manufacturing. Biden promised to add an additional one million manufacturing jobs to the US but has failed to attract new business. The issue here is that Germany has stated they would like to reduce their reliance on Chinese goods, as does America. Concurrently, Chinese manufacturing has strengthened to where they do not need to export as many goods from Germany.

The IFO, a German economic research institute, found that only 37% of companies stated they were dependent on China in February 2024 compared to 46% in the year prior. The research center noted that the outbreak of Russia’s war with Ukraine was the catalyst for the West decreasing trade with China. “The proportion of German companies that rely on important inputs or goods from China has declined in both industry and trade and is now just under 40% in each case,” the study states.

It is undeniable that Chinese goods come at a lower cost to the consumer. However, smart business does not conduct trade with an adversary, and the West was the first to label China due to its ties to Russia and the West’s desire to dismantle the One China policy with Taiwan. China is also hesitant to conduct business in the West, as they have seen numerous businesses sanctioned or dismantled. People are praising the US and Germany for reducing trade with China, one of the bad guys. They do not realize that this will lead to a higher cost of goods for everyone.

Martin Armstrong May 12th, 2024

Posted In: Armstrong Economics

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