Since September 2025, the US administration under President Donald Trump has imposed 15% tariffs on virtually all goods originating from the EU. According to a new study by the ifo Institute, these measures are hitting southern Germany’s industrial hubs particularly hard.
“The north–south divide is clear: while Potsdam even records a slight gain, industrial regions such as Salzgitter, Dingolfing-Landau, Wolfsburg and Ingolstadt face significant losses,” said Marcel Thum, head of the ifo Dresden branch.
Salzgitter records the steepest drop in value added, at –1.16%. It is followed by Dingolfing-Landau (–1.08%), Wolfsburg (–1.06%), Böblingen (–1.05%) and Ingolstadt (–0.98%). The study attributes these declines to the regions’ strong dependence on industries such as automotive and metal production.
Service-oriented regions, by contrast, see slight gains: Potsdam (+0.23%), Main-Taunus-Kreis (+0.22%), Cottbus (+0.18%) and Bonn (+0.17%).
“Overall, the tariffs could lead to a medium-term shift in economic activity from industry to services,” added Robert Lehmann of the ifo Institute.
Exports to the US forecast to fall again in 2026
Germany Trade & Invest (GTAI) expects further pressures for German exporters next year. In 2025, German shipments to the US fell by 7.8%, according to Destatis. For the full year, GTAI projects a decline of 8–9%.
For 2026, GTAI anticipates another drop — less pronounced, but still negative. Factors include a weakening US labour market, rising inflation and subdued private consumption. Added to this are harsher tariff measures, such as duties of 50% on steel and aluminium products.
The medium-sized mechanical engineering sector is particularly exposed. According to VDMA, up to 40% of German machine exports to the US are affected by tariffs. From January 2026, the tariff list is set to expand again.
Another growing issue is administrative burden. “Large machines consist of thousands of individual parts. The metal content and origin must be proven for each screw,” said one industry representative. Irregularities can lead to punitive tariffs of up to 200%.
Despite the downturn, the US remains Germany’s most important export market. “Despite the decline, business is still at a very high level,” GTAI noted. In 2024, export values reached €161.4 billion; for 2025, the figure is expected to come in just below €150 billion.
Industries respond differently to tariff pressure
How far companies can pass on tariff-related costs varies widely by sector. The more unique or specialised a product is, the easier it is to push through higher prices. In weaker sectors — such as construction or agricultural machinery — this is significantly harder, and demand has already slumped. Many companies are nonetheless expected to begin passing on rising costs to end customers in 2026.
Both GTAI and the ifo Institute expect potential structural shifts in the German economy over the medium term: away from traditional industrial goods and towards service offerings that are less sensitive to tariffs. Such a trend would also reshape logistics networks and supply chains.
