US Trade Deficit with EU Hits Record High, Fueling Trump's Tariffs

The United States' trade deficit with the European Union (EU) reached an unprecedented high in 2024, bolstering President Donald Trump's case as he prepares to impose tariffs on the bloc for its alleged failure to purchase adequate US goods.

According to Eurostat data, the EU imported €333.3bn (£277bn) of goods from the US in 2024, while the US purchased €531.6bn worth of items from Europe. This resulted in a trade surplus of almost €200bn in favor of the EU and a deficit for the US.

The imbalance has increased by over a quarter since 2023, when it totaled €156.6bn, and significantly exceeds the previous record of €166.9bn set in 2021. These figures emerge as President Trump plans to implement tariffs on nations worldwide to address what he perceives as unfair trade imbalances. The EU remains a primary target.

Earlier this month, Trump pledged to impose tariffs on the bloc "pretty soon," stating, "They don't take our cars, they don't take our farm products, they take almost nothing, and we take everything from them." Last week, he proposed a range of tariffs even on allied nations, arguing that the US "will no longer tolerate being ripped off." He has also instructed officials to assess reciprocal tariffs, including against countries that impose VAT, which could impact the UK.

Trump maintains that trade imbalances stem from systemic unfairness rather than economic disparities. He has attributed the imbalance with the EU to the bloc's high taxes on US imports.

Claus Vistesen of Pantheon Macroeconomics remarked, "The EU's trade surplus with the US is a red flag for Trump." Europe has historically exported more to the US than vice versa. However, the imbalance has widened in recent years due to diverging economic trajectories.

US exports to the EU declined by 4% in 2024 as the eurozone economy slowed, reducing consumers' and businesses' capacity to purchase American goods. Conversely, a buoyant US economy facilitated a 5.5% increase in EU exports to the US.

Vistesen noted, "The US economy is strong, and the American consumer has been relatively robust." He added, "Tariff front-running could also be a factor. If US companies anticipate steep tariff increases, they may stockpile inventory at lower pre-tariff prices."