The German economy, long considered the locomotive of Europe, is now facing serious problems. "Made in Germany" alone is no longer enough to remain competitive on the world stage. At the same time, tariffs imposed by the United States are only intensifying the pressure on the export sector, which is the bedrock of German economic growth.
"Made in Germany" has symbolized quality and reliability for decades, yet it is no longer sufficient to justify the higher prices that German products command. Consumers are increasingly opting for cheaper alternatives from China, India, or other European countries that offer comparable quality. Matthias Metz, CEO of Bosch Siemens Hausgerate (BSH), stressed in an interview with the Frankfurter Allgemeine Zeitung (FAZ) that customers are unwilling to pay more for German products when Asian competitors offer goods of equivalent quality.
The manufacturing sector has been hit hardest by the crisis. BSH is closing plants in Nauen and Bretten. Approximately 1,400 workers will lose their jobs. Despite the automation and profitability of these facilities, BSH decided on closure because Chinese competitors such as Midea, Haier, and Gree are aggressively expanding in Europe thanks to significantly lower costs for steel, energy, and wages. Additional regulatory burdens — including Germany's Supply Chain Due Diligence Act and the EU's Carbon Border Adjustment Mechanism (CBAM) — are making matters worse for German manufacturers.
Global competition and geopolitical uncertainty are pushing the situation toward the dramatic for Germany. BSH is responding with a network of nearly 40 factories worldwide, including in Mexico and the United States, to circumvent tariffs imposed by Trump. Even so, the company plans to lay off 3,500 people globally, including 1,000 in Germany, and warns of further cuts if markets do not stabilize.
Another pressing problem for German firms is the decline in exports to the United States — Germany's most important overseas market. From January to November 2025, exports fell by 9.4% to 135.8 billion euros. Imports from the U.S., meanwhile, rose by 2.2% to 86.9 billion euros. President Trump's tariff policy has turned the American market from a strong growth driver into a serious risk for Germany.
The automotive sector has been hit hardest, with exports of vehicles and parts falling by 17.5% to 26.9 billion euros. Mechanical engineering also recorded a 9% decline to approximately 24 billion euros, while pharmaceuticals posted a slight gain. Economists expect the weakness to persist even if disputes are resolved, because uncertainty is holding back investment.
The German economy must adapt to meet these challenges. BSH's Metz is calling for a rollback of bureaucratic intervention to revitalize the social market economy. On the export front, the trade conflict is forcing Germany to seek new markets, though German officials stubbornly maintain that their research shows tariffs hurt the United States itself the most — with 96% of the costs borne by American buyers.
