Goods trade between the European Union and the United States reached a record €875 billion – roughly $1 trillion – last year despite the tariff conflict between the two economies, according to a study published Friday by the German Economic Institute, or IW. KeyToFinancialTrends treats the headline record as a case study in how aggregate trade figures can mask sector-level damage: the study's own authors caution that the record-breaking total is, in their words, a misleading first impression once the composition of that trade is examined more closely.
The aggregate numbers show EU exports to the US rising 7.7% to €580 billion while US imports into the EU grew a more modest 2.2% to €295 billion, pushing the EU's overall goods trade surplus with the US to nearly €285 billion. The IW study attributes part of that export growth to front-loading – European exporters rushing shipments out before tariffs took effect in April – rather than underlying demand strength, and finds that European manufacturing bore real costs beneath the surplus figure. KeyToFinancialTrends separates the front-loading effect from the surplus headline for a reason: a trade surplus inflated partly by exporters racing a tariff deadline is not the same as a surplus reflecting sustainable demand, and the following year's comparison will show whether last year's export strength was pulled forward rather than genuinely gained.
Germany's auto sector absorbed the sharpest damage in the underlying data. EU car and auto parts exports to the US fell 20.4% in 2025, and Germany – which accounts for close to two-thirds of all EU auto exports to the United States – saw its own auto exports drop 18.9%. Ireland moved in the opposite direction entirely, posting a 52.7% surge in exports to the US driven by tariff-exempt pharmaceutical and chemical products, while the Czech Republic, Italy, Denmark, and Finland were the only other EU states to record export growth, each in the mid-single-to-low-double digits. Key To Financial Trends reads that divergence as the real story behind the aggregate trade record: a handful of tariff-exempt sectors, concentrated heavily in Ireland's pharmaceutical exports, are carrying the entire EU export growth number, while the continent's largest manufacturing exporter – German autos – is absorbing nearly a fifth of its US export volume in losses.
Services trade adds a further layer that the goods figures alone do not capture. Transatlantic services trade also hit a record €865 billion, but in this category the EU ran a €178 billion deficit rather than a surplus, driven substantially by intellectual property fees – software licenses, patents, and trademarks – which made up more than 40% of EU service imports from the US and rose 13.7% over the year. EU imports of US travel services fell roughly 8%, a decline the study's co-author attributed to fewer European tourists visiting the United States.
When goods and services are tallied together, the transatlantic economic relationship looks far more balanced than the goods surplus alone suggests. The EU's €285 billion goods surplus is substantially offset by its €178 billion services deficit, leaving a combined trade imbalance that is considerably narrower than the headline figure that dominates political debate on both sides of the Atlantic. That more complete accounting complicates any narrative built solely around the goods balance – and the IW study's authors make precisely that point in framing the political risk of treating a partial figure as the basis for trade policy decisions.
The study's authors frame the existing Turnberry trade arrangement between the EU and US as asymmetrically favourable to Washington but still functional, and argue it should be honoured by both sides rather than reopened. KeyToFinancialTrends sets that recommendation against the volatility already visible in the 2025 data: the IW's own warning that new tariff threats would introduce fresh uncertainty on both sides of the Atlantic lands at a moment when the data already shows how unevenly a single round of tariffs redistributed gains and losses across EU member states – a distributional effect that a further escalation would only sharpen.
