Trade in goods between the European Union and the United States reached a record €875 billion ($1.00 trillion) last year despite ongoing tariff tensions, according to a new study by the German Economic Institute (IW). As reported by Reuters, EU exports to the US rose 7.7% to €580 billion, while US exports to the EU increased 2.2% to €295 billion. This performance pushed the EU's overall goods trade surplus with the United States to nearly €285 billion. However, IW economist Samina Sultan warned that the apparent strength in trade flows was partly driven by front-loading of shipments ahead of tariff increases that came into effect in April. The research found that "this first impression is misleading," as European manufacturing had suffered significant economic damage despite the headline figures, with certain sectors already suffering significantly, particularly the automotive sector.
Despite overall trade growth, European manufacturing, particularly the automotive industry, experienced significant pressure. According to the IW study, EU exports of cars and automotive parts to the United States fell 20.4% in 2025. Germany, which accounts for nearly two-thirds of EU auto exports to the US, recorded an 18.9% drop in shipments. This decline underscores the sector-specific impact of tariff-related disruptions even as aggregate trade numbers remain strong, highlighting how trade conflicts can create winners and losers within different industries. The study emphasized that "European manufacturing had suffered" from the trade tensions, with the automotive sector bearing the brunt of the tariff impact. The findings suggest that while overall EU-U.S. trade remains resilient and continues to hit new highs, the benefits are unevenly distributed, with key manufacturing industries facing mounting headwinds as tariff pressures and geopolitical uncertainties reshape global trade patterns.
Not all EU economies followed the downward trend in US exports. As reported by Reuters, Ireland posted a 52.7% surge in exports to the US, driven largely by tariff-exempt pharmaceutical and chemical products. Other countries that recorded export growth included the Czech Republic (+5.1%), Italy (+7.2%), Denmark (+10.6%) and Finland (+10.8%), while most other EU member states saw declines in exports to the US. This divergence demonstrates how different sectors and countries within the EU are affected differently by trade policies and tariff structures. The IW study noted that "apart from Ireland only the Czech Republic (+5.1%), Italy (+7.2%), Denmark (+10.6%) and Finland (+10.8%) reported growth," highlighting the concentrated nature of export growth across the bloc.
Transatlantic services trade also reached a record €865 billion, though the EU ran a €178 billion deficit in this segment, according to the IW study. Intellectual property payments—covering software licences, patents and trademarks—accounted for more than 40% of EU service imports from the United States, rising 13.7%. The report noted that while services have largely escaped direct tariff impacts, the broader trade conflict has still affected flows. EU imports of US travel services fell by around 8%, a decline attributed to fewer European tourists visiting the United States last year. As co-author Galina Kolev-Schaefer explained, "this decline is likely attributable to the reduced number of European tourists in the U.S. last year," demonstrating how indirect impacts of trade tensions can affect sectors not directly targeted by tariffs. The findings suggest that while overall EU-U.S. trade remains resilient and continues to hit new highs, the benefits are unevenly distributed, with U.S. technology and innovation companies maintaining their dominance in cross-border services.
The IW study concluded that the Turnberry trade deal between the EU and the US has asymmetrically benefited Washington, although it remains a workable arrangement that should be maintained by both sides. As reported by Reuters, the institute warned that "new tariff threats would cause new uncertainty that only hampers business activities on both sides of the Atlantic." The findings come amid ongoing efforts to stabilise transatlantic trade relations, with policymakers on both sides seeking to balance industrial competitiveness with tariff-related pressures. The study emphasized that "the overall picture of trade between the EU and the US remains mixed: overall growth in volume does not negate the issues in specific sectors that require further research and policy decisions." The IW report warns policymakers to address mounting pressures on autos and services sectors, highlighting the importance of considering both goods and services trade when evaluating overall trade performance.
