Understanding U.S. Relations with Germany: History, Trade, and Strategic Interests 

Introduction

Germany is the largest economy in Europe by GDP. Its diplomatic ties with the United States play a significant role in ensuring political stability in Europe and fostering economic development between the two nations. Alongside the United States, the European Union stands as a key supporter of Ukraine in its conflict with Russia. Currently, Germany holds a prominent position in NATO, leading the Very High Readiness Joint Force (VJTF). Additionally, Germany ranks as the fifth-largest trading partner of the United States, with annual bilateral trade exceeding $260 billion in goods and services. Therefore, the relationship between the U.S. and Germany is vital for the economic growth, security, cultural exchange, and mutual interests of both nations.

Quick Facts

History of U.S.─Germany Relations

Until the 20th century, commerce and immigration were the primary factors shaping the relationship between the U.S. and Germany. However, during WWI, Germany’s alignment with Austria-Hungary, Bulgaria, and the Ottoman Empire, known as the Central Powers, and the U.S.’s support for the Allies, including the United Kingdom, Russia, Italy, and Japan, disrupted their relationship. Germany’s threats to the U.S., such as unrestricted submarine warfare and attempts to form a partnership with Mexico to invade the United States, turned them from rivals to enemies. Relations were later restored through peace and trade treaties signed in 1921 and 1923.

In 1941, Japan’s attack on Pearl Harbor prompted the U.S. to declare war on Japan, thus becoming an enemy of the Axis powers, which included Germany, Italy, and Japan. Despite lacking a formal relationship, many German refugees found sanctuary in America, including notable figures such as Thomas Mann, Albert Einstein, Marlene Dietrich, and Kurt Weill.

Following Germany’s defeat in WWII, the Potsdam Conference divided the country into Western and Eastern regions, dominated by the U.S., U.K., France, and the Soviet Union, respectively. The formation of NATO by the Western bloc and the Warsaw Pact by the Eastern bloc marked the onset of the Cold War. Post-WWII Germany symbolized democracy in the West and communism in the East, with West Germany emerging as a strong military and economic power. The reunification of Germany in 1990 solidified its relationship with the U.S.

In response to the 9/11 terrorist attacks, Germany, as a NATO member, sent troops to Afghanistan to support the U.S., although it opposed the Iraq War in 2003 due to concerns over destabilizing the Middle East.

Friction arose in the U.S.-Germany relationship in 2013 following mass surveillance disclosures, where the FBI and NSA illegally collected personal data of German citizens. This led to Germany canceling the 1968 UKUSA Agreement, an intelligence-sharing pact with the U.S. and U.K.

The relationship between the two nations has been influenced by the stances of their respective presidents and chancellors. During the Trump and Merkel administrations, differences over trade, immigration, and relations with Russia strained ties. However, with the election of Joe Biden and Olaf Scholz, both countries’ relationship has strengthened, marked by shared political ideas and increased cooperation, particularly evident during the Ukraine War, which bolstered their economic and political ties.

Understanding the Current Relationship

In 2022, Germany took significant steps to support Ukraine in the Russo-Ukrainian War by donating 5,000 helmets and a complete field hospital. Initially, Germany refrained from providing military assistance to Ukraine, which strained its relationship with the United States. However, during a meeting between Chancellor Olaf Scholz and President Joe Biden in February 2021, Scholz reiterated Germany’s alignment with the United States in supporting Ukraine while expressing a cautious approach to avoid escalating tensions with Russia.

Germany’s reluctance to engage militarily stemmed partly from the belief that economic integration could help deter further conflict, along with considerations of its reliance on the Nord Stream 1 pipeline for affordable natural gas.

The Nord Stream 1 pipeline, a key source of natural gas from Russia, had been a major factor in Germany’s neutrality stance. However, in late August 2022, gas flow through the pipeline halted due to Western sanctions and equipment leaks. With Germany no longer dependent on Russian gas, the country shifted its position and began providing military support to Ukraine. This support includes armored fighting vehicles, air defense, artillery, and other resources to bolster Ukrainian sovereignty.

In response to Germany’s shift, the United States became a significant supporter by agreeing to supply Germany’s demand for natural gas through a 20-year contract, supplying 2.25 million tonnes per year. This partnership reflects a strategic move to strengthen ties between the two nations while supporting Ukraine in its defense against Russian aggression.

Strategic Interests

Future DevelopmentsThe Just Energy Transition Partnership, comprising G7 members, is dedicated to assisting developing nations in expanding and transitioning to renewable energy sources. Recent commitments indicate that the United States will invest $8.5 billion and Germany €700 million in South Africa. This investment aims to prevent up to 1.5 gigatonnes of greenhouse gas emissions over the next two decades. Furthermore, both countries are committed to the Paris Agreement and are actively developing strategies to limit the global average temperature increase to 1.5°C.