EU-US Trade Hits Record €875 Billion Despite Tariff Tensions, German Study Reveals

Post by : Saif

Trade in goods between the European Union (EU) and the United States reached a record €875 billion (approximately $1 trillion) last year despite ongoing tariff tensions, according to a study released by the German Economic Institute (IW). While the figures highlight strong trade activity, researchers warned that the overall numbers hide significant economic damage, particularly for Germany's automobile industry.

The report found that EU goods exports to the United States increased by 7.7% to €580 billion, while U.S. exports to the European Union rose 2.2% to €295 billion. This resulted in the European Union recording a trade surplus of nearly €285 billion with the United States.

Export Growth Driven by Pre-Tariff Shipments

According to the study, part of the increase in exports was due to companies shipping goods before higher U.S. tariffs came into effect in April. Researchers said the record trade figures should not be viewed as a sign that European industries escaped the impact of the trade dispute.

IW economist Samina Sultan said the impressive trade numbers give a misleading picture because many European manufacturers have suffered losses despite the increase in exports.

Germany's Automobile Industry Suffers Heavy Losses

The report identified the automotive sector as one of the biggest casualties of the tariff dispute.

Exports of EU-made cars and automotive parts to the United States fell by 20.4% during the year. Germany, which accounts for nearly two-thirds of the EU's vehicle exports to the U.S., recorded an 18.9% decline in auto exports, highlighting the pressure faced by one of Europe's most important industries.

Ireland Emerges as the Biggest Winner

Unlike most EU member states, Ireland recorded a 52.7% increase in exports to the United States. The growth was mainly driven by pharmaceutical and chemical products, which were exempt from tariffs.

Other countries that posted export growth included:

• Czech Republic – 5.1%
• Italy – 7.2%
• Denmark – 10.6%
• Finland – 10.8%

Most other EU countries experienced a decline in exports to the U.S.

Services Trade Also Reaches Record Levels

The study also revealed that EU-US services trade reached a record €865 billion. However, the European Union recorded a €178 billion deficit in services trade.

Researchers noted that when both goods and services are considered together, the overall trade relationship between the EU and the United States appears more balanced than goods trade figures alone suggest.

More than 40% of EU service imports from the United States consisted of intellectual property payments, including software licenses, patents, and trademarks. These payments increased by 13.7% during the year.

Trade Dispute Also Affects Tourism

Although U.S. tariffs have largely targeted goods, the report found indirect effects on the services sector.

EU imports of travel services from the United States declined by around 8%, which researchers believe reflects a decrease in the number of European tourists visiting the U.S.

Co-author Galina Kolev-Schaefer said the decline in tourism demonstrates how trade tensions can affect broader economic activity beyond manufacturing.

Researchers Warn Against New Tariff Threats

The study concluded that the Turnberry trade agreement has benefited the United States more than the European Union but remains a practical arrangement that should be respected by both sides.

Researchers warned that any new tariff measures or renewed trade disputes would create further uncertainty for businesses and investors, ultimately harming economic growth across both Europe and the United States.

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