Record EU-US trade hides a very real industrial fracture

Introduction: a record number that deceives too easily

875 billion euros, the statistic that reassures too quickly

A study published Friday by the German Economic Institute (IW) reveals that trade in goods between the European Union and the United States reached a record level of 875 billion euros, roughly 1 trillion dollars, last year. On paper, this figure might suggest that the tariff tensions imposed by Donald Trump ultimately had only a marginal impact on the transatlantic economic relationship.

But IW economist Samina Sultan warns that "this first impression is misleading." And she is right. Behind the record-breaking headline lies a far more contrasted reality, made up of unexpected winners and clearly identifiable industrial losers.

Why this number deserves dissection, not celebration

European exports to the United States jumped 7.7% to reach 580 billion euros, while American imports into the EU grew by only 2.2%, to 295 billion euros. The result: Europe's trade surplus now sits close to 285 billion euros. A figure that, presented on its own, would make Europe look like the big winner of Trump's tariff war.

This superficial reading is precisely the trap I want to avoid in this editorial. An overall trade surplus says nothing about the sectors sacrificed along the way, nor about the price certain European industries paid to keep up the appearance of thriving trade.

The German auto industry, collateral damage of the 15% tariff

A near-19% drop that fools no one

Europe's auto sector paid the heaviest price in the tariff deal struck with Washington. EU exports of vehicles and auto parts to the United States fell 20.4% in 2025, a collapse that hits Germany first, which alone accounts for nearly two-thirds of European auto exports to the American market.

In concrete terms, German auto exports to the United States fell 18.9%. For a country whose auto industry has historically been an economic and cultural pillar, this decline is not a mere statistical adjustment: it is a very real industrial bleed, with direct consequences for jobs and supply chains.

The 15% tariff, a compromise that is anything but trivial

Let's recall the context: in July 2025, the European Union and the United States reached an agreement setting a 15% tariff cap on nearly all European exports, including automobiles, auto parts, pharmaceutical products and semiconductors. That rate, well below Trump's initial threat of 30%, nonetheless remains well above historic tariff levels between the two blocs.

The European Parliament eventually formally approved this tariff deal in June 2026, ratifying what several European observers had, from the initial announcement, called a "collective humiliation" for the continent.

Ireland, the unexpected big winner of this redistribution

A 52.7% jump driven by pharmaceuticals and chemicals

While Germany absorbs the auto shock, Ireland is spectacularly cashing in. Its exports to the United States climbed 52.7%, a surge directly driven by pharmaceutical and chemical products, two categories that benefit from specific tariff exemptions under the transatlantic agreement.

This dramatic divergence between Germany and Ireland shows just how much the record EU-US trade figure masks a deeply unequal redistribution of gains and losses across sectors and member states of the Union.

A multi-speed Europe facing American tariffs

This contrast between the two European economies is not a mere statistical accident. It reflects a tariff architecture negotiated with targeted exemptions, which structurally favors certain sectors — pharmaceuticals, chemicals — at the expense of others, notably the traditional auto and manufacturing industry, more concentrated in Germany, France and Central Europe.

This asymmetry raises a fundamental question for European leaders: can a common trade policy remain coherent if its effects diverge so radically from one member state to another?

Services, the invisible battlefield of the American deficit

865 billion euros in trade, but a reversed imbalance

Beyond physical goods, transatlantic services trade also hit a record of 865 billion euros. But unlike goods trade, where Europe holds the upper hand, it is the European Union that runs a deficit of 178 billion euros against the United States here.

This reversal between goods and services deserves attention: the image of a Europe "winning" overall against the United States does not survive a rigorous sector-by-sector look. In services, it is very much American companies that dominate the European market.

American tech giants, the quiet drivers of this deficit

More than 40% of European services imports from the United States involve intellectual property fees — software licenses, patents and trademarks — a category that jumped 13.7%. This figure reflects the European economy's persistent structural dependence on American tech giants, companies largely immune to the classic tariff logic applied to physical goods.

This digital dependence is, in my view, a strategic blind spot for Europe: fierce negotiations happen over tariffs on steel, aluminum or automobiles, yet tens of billions of euros flow every year to American tech platforms with no real equivalent European industrial counterweight.

The geopolitical backdrop: a tariff deal imposed, not negotiated as equals

Turnberry, symbol of an unbalanced power dynamic

The July 2025 tariff deal, sealed during a meeting between Donald Trump and European Commission President Ursula von der Leyen on a golf course in Scotland, was seen by many European observers as more of a capitulation than a balanced negotiation. Europe committed to buying 750 billion dollars of American energy and investing an additional 600 billion dollars in the United States by 2028, in exchange for a 15% tariff cap instead of the 30% initially threatened.

German Chancellor Friedrich Merz himself had publicly acknowledged that an open trade conflict would have seriously hurt the German economy, implicitly justifying the acceptance of terms a large part of European public opinion deemed unfavorable.

A power imbalance that still calls for clear-eyed strategic priorities

Despite this tariff imbalance, it would be irresponsible to ignore the geopolitical reality underlying this relationship: facing the growing threat posed by China, Vladimir Putin's Russia and Iran, maintaining a solid economic alliance with the United States remains a strategic pillar for Western security and prosperity, even when that alliance involves painful trade compromises.

It is precisely this tension between a one-off tariff humiliation and a long-term strategic necessity that defines Europe's current trade policy: an uncomfortable but hard-to-avoid balance given the geopolitical context of 2026.

What this study reveals about the future of transatlantic relations

A fragile trade peace, not a full reconciliation

The IW study confirms that the transatlantic trade relationship, though broadly stabilized since the 2025 deal, remains crossed by deep sectoral tensions that are far from resolved. Germany's auto sector will likely keep suffering as long as the 15% tariff stays in place, while sectors like Irish pharmaceuticals will keep thriving thanks to their specific exemptions.

This situation creates a delicate political dynamic within the European Union itself, where some member states objectively benefit from the tariff deal while others bear its heaviest economic weight, fueling internal tensions that Brussels will need to manage carefully in the months ahead.

Toward an inevitable renegotiation after the American midterms

With American midterm elections scheduled for November 2026, the question of this tariff deal's durability remains open. A change in majority in the US Congress could influence the future trajectory of Washington's trade policy toward the European Union, with nothing guaranteeing an outcome favorable to European interests.

In this uncertain context, Europe would do well to use the current period of relative tariff stability to strengthen its own industrial competitiveness, rather than settling for celebrating trade records that mask very real structural weaknesses.

How other powers view this transatlantic relationship

China watches every Western friction closely

While Brussels and Washington negotiate tariffs and sector exemptions, China closely watches every sign of division within the Western bloc. Beijing is actively seeking to position itself as an alternative supplier for European sectors hit hardest by American tariffs, notably Germany's struggling auto industry.

This dynamic makes it all the more urgent for the European Union to resolve its trade tensions with the United States quickly, or else certain European industrial sectors could be tempted to turn further toward Chinese partnerships with potentially problematic geopolitical consequences for long-term Western security.

A Western cohesion worth preserving despite trade friction

This risk of Western economic fragmentation must remain a central concern for European and American leaders. Facing Vladimir Putin's Russia in Ukraine and Iran's regional ambitions, a European Union tempted to diversify its trade partnerships toward China would weaken Western strategic cohesion at the very moment it is most needed.

That is why, despite the legitimate frustrations sparked by the American 15% tariff, the strategic priority must remain consolidating the transatlantic relationship rather than questioning it in favor of partners less reliable on democratic grounds.

What European consumers pay without seeing it

The hidden cost of tariffs on purchasing power

Behind the big macroeconomic statistics lies an often-forgotten effect: part of the cost of these tariff tensions always ends up falling on the ordinary European consumer, in the form of higher prices or fewer product choices. European companies facing higher export costs frequently pass part of that burden onto their domestic markets to protect their margins.

This phenomenon remains largely invisible in European public debate, dominated by big trade surplus statistics, even though it directly hits European households' wallets, in Germany as much as in France or Italy.

A political bill that could resurface in the next European elections

This social dimension of the transatlantic trade file is not politically trivial. European populist parties, on both the left and the right, will not miss the chance to exploit this diffuse discontent to criticize the European Commission's handling of this file, especially if the German auto sector keeps suffering in the months ahead.

Brussels will therefore have to manage not only the direct economic consequences of this tariff deal, but also its internal political fallout, in a European context already weakened by rising populism on several fronts.

Conclusion: a record that must be read with eyes wide open

The number that reassures, the reality that demands attention

The record 875-billion-euro trade between the European Union and the United States looks, at first glance, like good news for an economic relationship put through the wringer by recent years' tariff tensions. But as economist Samina Sultan rightly points out, this first impression is misleading, and sector-by-sector analysis reveals deep fractures that the headline figure cannot hide.

Germany's auto industry pays a heavy price, Ireland reaps disproportionate gains, and Europe's technology services deficit keeps quietly widening. It is this contrasted reality, not the simple record figure, that should guide European political and economic decisions in the months ahead.

A lesson in clear-headedness for European decision-makers

Faced with this complexity, European leaders' responsibility is clear: don't be lulled by flattering headline statistics, but tackle head-on the sectoral fragilities this study reveals. It is this clear-headedness, more than any surface-level trade triumphalism, that will determine Europe's economic resilience in the next rounds of trade arm-wrestling with Washington.

By Maxime Marquette, columnist

Columnist's transparency note

Who I am and my acknowledged biases

I write this editorial as a columnist convinced of the need for a solid Western alliance against authoritarian regimes, but also critical of the sometimes brutal trade methods of the Trump administration. These two convictions coexist in my analysis, even though I rely exclusively on verifiable economic data to support my arguments.

I am not a trained economist, and here I rely on the conclusions of a specialized study rather than on original statistical analysis I would not be qualified to produce myself.

What I don't know, and my method

I cannot predict with certainty how this tariff deal will evolve after the American midterm elections, nor whether the sectoral tensions described here will worsen or ease in the coming months.

My method relies on cross-reading the German Economic Institute's study alongside several European journalistic and institutional sources to place these figures in their full political and historical context.

Sources

Primary sources

EU trade with US hits record despite tariff tensions, study shows — Reuters, July 3, 2026

EU Trade With US Hits Record Despite Tariff Tensions, Study Shows — US News, July 3, 2026

EU-US tariffs: tensions, trade deal and what could change — European Parliament, June 19, 2026

Secondary sources

European parliament finally approves Trump tariff deal — The Guardian, June 16, 2026

How much is EU trade with the US falling? — Euronews, June 9, 2026

EU plunged into uncertainty over US trade deal — Le Monde, February 24, 2026