EU trade with US hits record high despite tariff tensions

[BERLIN] Trade in goods between the European Union and the US reached a record US$1trillion last year despite tariffs, but the figures mask significant economic damage, notably to Germany’s auto sector, a study published on Friday found.

The research by the German Economic Institute, or IW, found a 7.7 per cent rise in EU exports to the US to 580 billion euros (S$856.9 billion), while US imports into the EU climbed 2.2 per cent to 295 billion euros, pushing the EU’s trade surplus to nearly 285 billion euros.

The report attributed some of the increase to front-loading of exports ahead of tariffs that took effect in April and said European manufacturing had suffered.

“This first impression is misleading,” said IW economist Samina Sultan.

EU car and parts exports to the US fell 20.4 per cent in 2025, with Germany, which accounts for nearly two-thirds of EU auto exports to the United States, posting an 18.9 per cent drop.

Ireland bucked the trend with a 52.7 per cent surge in exports, driven by tariff-exempt pharmaceutical and chemical products.

Most EU member states recorded a decline in their goods exports to the US. Apart from Ireland only the Czech Republic (+5.1 per cent), Italy (+7.2 per cent), Denmark (+10.6 per cent) and Finland (+10.8 per cent) reported growth.

Transatlantic services trade also hit a record 865 billion euros, though the EU ran a 178 billion euro deficit in that category.

“The transatlantic trade relationship is therefore much more balanced, when considering both goods and service trade,” the study said, contrasting the EU deficit in services and the surplus in goods. Intellectual property fees – covering software licences, patents and trademarks – accounted for more than 40 per cent of EU service imports from the US, rising 13.7 per cent.

Although the services sector has so far avoided the impact of US tariffs, the trade conflict has had a negative effect.

EU imports of travel services from the US fell by around 8 per cent. “This decline is likely attributable to the reduced number of European tourists in the U.S. last year,” said co-author Galina Kolev-Schaefer. The study said the Turnberry trade deal between the EU and the US asymmetrically benefited the US, but still it was a workable solution that should be honoured by both sides.

“New tariff threats would cause new uncertainty that only hampers business activities on both sides of the Atlantic,” the IW said. REUTERS