#MacroFriday: EU Trade in Goods with US

Trump threatens the EU with tarrifs as he eyes the European trade surplus with the US.
In December, we discussed how he threatened the US major trading partners without mentioning the EU. This changed on Tuesday.  In recent years, the European Union (EU) has experienced a notable increase in its trade surplus with the United States. In 2023, the EU's trade surplus in goods with the U.S. reached €156 billion. This trend continued into 2024, with exports to the US reaching a record high as the total already stood at € 490 billion for 2024 without including December. Meanwhile imports are stagnating, resulting in a rise in the EU trade surplus with the US for 2024.

The primary contributors to this surplus are machinery and vehicles (41%) and chemicals and medicines (25%). Energy products were the largest import category in the EU from the US. The U.S. is Belgium's largest export destination, accounting for 19.8% of total exports, with a remarkable 64% of these exports consisting of chemicals or pharmaceutical products. This makes the U.S. a vital market for Belgium's chemical and pharmaceutical sectors, emphasizing the critical importance of maintaining strong trade relations.

These growing trade imbalances have led to tensions. U.S. President Donald Trump has expressed concerns over the trade deficit and has proposed measures to address it, including potential tariffs on European goods and encouraging the EU to increase imports of U.S. energy products. Following Russia's invasion of Ukraine and the imposition of bans on Russian oil and gas, the United Stated partly replaced Russia as a source of these imports. Clearly, president Trump want the Europeans to buy more.