German exports, industrial output dip as pre-tariff boost ends

By Maria Martinez

BERLIN, June 6 (Reuters) - German exports and industrial output fell more than expected in April as demand from the United States decreased following months of strong purchases in anticipation of U.S. tariffs, official data showed on Friday.

Europe's largest economy grew in the first quarter, helped by exports and industry front-loading ahead of anticipated U.S. tariffs, but this effect started its reversal in April, when German exports fell 1.7% from the previous month.

Analysts forecast a 0.7% drop in a Reuters poll.

Exports of goods to the U.S. fell by 10.5% compared with March, while exports to other European Union countries rose 0.9%, according to the Federal Statistics Office.

The U.S. was Germany's top trading partner in 2024 with two-way goods trade totalling 253 billion euros ($289.08 billion), and its export-oriented economy is expected to be among the hardest hit by tariffs rolled out by President Donald Trump's administration.

While German exporters should benefit from an expected moderate economic recovery in the EU, much will depend on how trade negotiations between Brussels and Washington go, said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.

Trump has set a July 9 deadline for the 27-bloc European Union and other trading partners to reach trade deals and avert steep tariffs.

INDUSTRY SETBACK

The statistics office also said that German industrial production fell by 1.4% in April month-on-month, more than a 1.0% decline predicted in a Reuters poll, and revised down March growth to 2.3% from originally reported 3.0%.

On a positive note, data on Thursday showed German industrial orders unexpectedly rose in April, driven by strong domestic demand, boding well for the rest of the quarter.

"The positive figures on incoming orders published yesterday and the slightly improved sentiment among companies give hope that industrial production will also increase in the second quarter," Commerzbank's economist Ralph Solveen said.

Franziska Palmas, senior Europe economist at Capital Economics said, however, tariffs still loomed large over the economy.

"With U.S. tariffs likely to continue to weigh on industrial output and the outlook for demand for German industrial goods poor, we think production will remain subdued this year," she said.

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