The European Union’s goods trade deficit with China hit €360 billion in 2025. That number climbed nearly 20% year-over-year, and it has German Chancellor Friedrich Merz in a politically uncomfortable spot.
Germany alone accounts for nearly €90 billion of that shortfall, a figure that jumped 33% in a single year. Merz has publicly called the imbalance “unhealthy,” noting it quadrupled over five years.
The automaker problem
Bilateral trade between Germany and China exceeded €250 billion in 2025, making China one of Germany’s most important trading partners by sheer volume. German car exports to China have fallen roughly 66% from their 2022 peaks.
The European Commission has been pushing tougher measures aimed at countering Chinese overcapacity and subsidies, particularly in sectors like electric vehicles where Beijing’s state-backed manufacturers have flooded global markets with competitively priced products.
