Finance
German Firms Trapped Between U.S. And China, Study Finds
Published by Global Banking & Finance Review®
Posted on March 30, 2026
2 min readLast updated: March 30, 2026
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A study by the University of Sussex and King’s College London finds German DAX and MDAX firms are deeply intertwined with both the U.S. and China—making decoupling from either costly. Automakers lean on China, pharma/R&D tie to the U.S., digital/telco firms depend heavily on both.
Study Reveals German Companies Can't Afford to Decouple from US or China
German Corporate Dependence on US and China: Key Findings
By Maria Martinez and Rene Wagner
Overview of the Study
BERLIN, March 30 (Reuters) - German companies are so deeply tied to both the United States and China that they cannot decouple from either without severe economic costs, according to a study by the University of Sussex and King's College London seen by Reuters on Monday.
Research Methodology
The researchers mapped sales, production and supply-chain exposures of firms listed on Germany's DAX and MDAX indices, finding that dependence on the world's two biggest economies runs across sectors and individual companies.
Sector-Specific Dependencies
Automotive and Machinery Sectors
Automakers and machinery groups are most reliant on China as a market, while chemical and pharmaceutical firms depend more heavily on the U.S. for research, development and production, the study said. Digital, telecoms and semiconductor companies, meanwhile, are highly exposed to suppliers in both countries.
Case Studies: Siemens and BMW
"Leading industrial players like Siemens and BMW were built in a fundamentally globalised system and can't decouple from either China or the US without devastating losses," University of Sussex political economist Steven Rolf, a co-author, said.
The study said BMW generates more revenue from China than from the United States, while also depending on Chinese battery supplier CATL for more than 1.4 billion euros ($1.5 billion) in inputs.
Siemens gets 24% of revenue from the United States and 12% from China, with supplier networks heavily exposed to both.
Implications for German Policy
The findings underscore the difficulty for Berlin in crafting a clear strategy as U.S.-China tensions intensify, Rolf said.
(Reporting by Maria Martinez and Rene WagnerEditing by Ludwig Burger)
Key Takeaways
- •German companies cannot effectively decouple from either China or the U.S. without facing major economic disruptions, owing to integrated sales, production, and supply chains.
- •Automakers such as BMW face acute reliance on China—BMW’s China sales dropped ~12.5% in 2025—and also face U.S. tariff pressures; digital and telecom sectors are simultaneously exposed to both economies.
- •The investment trends underline complexity: German direct investment in the U.S. plunged ~45% year-on-year in 2025, while investment into China rose sharply; firms are deepening operations in China amid global policy uncertainty.
Frequently Asked Questions about German firms trapped between U.S. and China, study finds
1Why can't German firms decouple from the US or China?
German companies are deeply integrated with both US and Chinese markets, making decoupling economically damaging.
2Which sectors are most dependent on China?
Automakers and machinery groups are most reliant on China, particularly as a market for their goods.
3How are chemical and pharmaceutical firms affected?
German chemical and pharmaceutical firms depend more on the US for research, development, and production.
4What challenges does this pose for German economic strategy?
The strong ties to both the US and China make it difficult for Germany to create a clear economic strategy amid rising tensions.
5Which German companies are highlighted in the study?
The study specifically mentions Siemens and BMW as examples of firms that rely heavily on both US and Chinese markets and supply chains.