Transatlantic goods trade between the European Union and the United States reached a record €875 billion ($1 trillion) in 2025, according to a study published on Friday by the German Economic Institute, known by its German acronym IW. The headline number looks like a triumph. The researchers say it is not.

Reuters reports that the IW found EU exports to the US climbed 7.7% to €580 billion, while American goods flowing into the EU rose 2.2% to €295 billion. That pushed the EU's trade surplus in goods to nearly €285 billion. But the institute cautioned strongly against reading those figures as a sign of health.

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

A rush before the storm

The IW attributes a significant share of the export rise to front-loading: European companies accelerated shipments to the US in the months before American tariffs took effect in April 2025. That burst of activity artificially inflated annual totals while masking a deterioration that set in once the levies landed. Eurostat data confirm the pattern: EU exports to the US dropped 30% year-on-year in the first quarter of 2026 compared with the same period in 2025, when front-loading was at its peak.

The damage was sharpest in European manufacturing. EU car and parts exports to the US fell 20.4% across 2025. Germany, which accounts for nearly two-thirds of all EU auto exports to the United States, recorded an 18.9% drop. For an economy that has long relied on premium car exports as an engine of growth, that is a significant blow.

Winners, losers, and a services blind spot

The country-level breakdown exposes how unevenly the tariff storm hit. Ireland surged ahead with a 52.7% rise in goods exports, driven by pharmaceuticals and chemicals that remained exempt from the new duties. Beyond Ireland, only a handful of countries posted growth: Finland was up 10.8%, Denmark 10.6%, Italy 7.2%, and the Czech Republic 5.1%. Most EU member states recorded a decline.

Services trade tells a different story. Transatlantic services trade also hit a record €865 billion, though here the EU ran a deficit of €178 billion rather than a surplus. Intellectual property fees, covering software licences, patents, and trademarks, accounted for more than 40% of EU service imports from the US and rose 13.7%. The IW notes that when goods and services are combined, the transatlantic relationship looks far more balanced than the goods-only figures suggest.

“"This decline is likely attributable to the reduced number of European tourists in the US last year," said IW co-author Galina Kolev-Schaefer, referring to an 8% fall in EU imports of American travel services.”

A deal that favours Washington

The study's publication lands just days after the EU formally ratified the so-called Turnberry trade deal, a framework agreement first announced in August 2025 that caps most US tariffs on EU goods at 15% while eliminating EU duties on American industrial exports. The IW's assessment of that deal is measured: the agreement asymmetrically benefits the United States, but is a workable settlement that both sides should honour. The institute warned that fresh tariff threats would create new uncertainty, hampering business on both sides of the Atlantic. The EU's trade surplus with the US, once both goods and services are included, narrows to around €20 billion, according to EU Council data, a figure that represents roughly 1% of total transatlantic trade.

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