the Widening Trade Gap: A Source of Friction

The United States faces a meaningful trade imbalance with the European Union, importing a ample $235.6 billion more in goods than it exports to the 27-nation bloc. This commercial deficit has become a focal point of trade policy, notably under the current governance’s focus on bolstering domestic production and reducing reliance on foreign imports.

Tit-for-Tat Tariffs: Escalating Trade War?

In an attempt to address this imbalance, the United States initiated a 20% tariff on select goods imported from the EU on April 2nd. The stated goal is to disincentivize European exports to the US and stimulate domestic manufacturing. Though, this move has been met with strong opposition from the EU, which already faces a 25% US tariff on steel, aluminum, and automobiles.

The EU has retaliated by imposing tariffs on US goods valued at $23.8 billion, denouncing the US tariffs as unjustified and harmful. This reciprocal action raises concerns about a potential escalation into a full-blown trade war, which could have significant economic consequences for both sides.

Decoding the Trade Relationship: What the US Sells to Europe

Despite the tensions, the US-EU trade relationship remains one of the largest in the world. In 2024, trade between the two economic powerhouses approached $1 trillion, solidifying the EU’s position as the United States’ largest trading partner.

Data from the United States International Trade Commission reveals that the US primarily exports fuels, pharmaceuticals, machinery, and aircraft to the EU. A closer look at the 2024 figures reveals the specific breakdown:

• Fuel Minerals: $78.9 billion (21.3% of total exports)
• Pharmaceutical Products: $39.4 billion (10.6% of exports)
• Nuclear Reactors, Boilers, Machinery, and Mechanical Devices: $36.6 billion (9.9% of exports)
• Aircraft, Space Vehicles, and Parts: $35.1 billion (9.5% of exports)
• Optographic, Photographic, and Cinematographic Equipment: $30.8 billion (8.3% of total exports)

Decoding the Trade Relationship: What the US Buys from Europe

Conversely, the United States imports a significant amount of pharmaceutical products, machinery, cars, and other non-railway vehicles from the EU.

In 2024, US imports from the EU totaled $605.8 billion. The key imports included:

• Pharmaceutical Products: $127 billion (21% of total imports)
• Nuclear Reactors, Boilers, Machinery, and Mechanical Appliances: $89.8 billion (14.8% of imports)
• Cars and Other Non-Railway Vehicles: $60.3 billion (10% of imports)
• Electric Equipment: $39.3 billion (6.5% of imports)
• Optographic, Photographic, and Cinematographic Equipment: $36.9 billion (6.1% of total imports)

State-Level Trade Dynamics: Who’s Importing and Exporting the Most?

The impact of US-EU trade is not uniform across the United States. Different states play different roles in the import and export landscape.

According to the United States International Trade Administration, Indiana leads the nation in imports from the EU, purchasing goods worth $49.3 billion in 2024. New Jersey follows with $40.9 billion, and North Carolina with $39.6 billion.

On the export side, Texas dominates, selling goods valued at $81.5 billion to the EU in 2024. California ranks second with $28 billion, and Louisiana is third with $20.8 billion.

The United States and the European Union: A tale of Two Trade Flows

The economic relationship between the United States and the European Union is a complex web of imports and exports,with each state contributing uniquely to the overall picture. Understanding these trade dynamics is crucial for businesses, policymakers, and anyone interested in the global economy. This analysis delves into the primary goods each US state exports to and imports from the EU, revealing key sectors and potential vulnerabilities.

Soaring High: Aerospace Dominates US Exports to the EU

Aerospace products and parts constitute the leading export category from the United States to the EU.A significant number of states, specifically fifteen, identify this sector as their primary export. These states include arizona,Arkansas,Connecticut,Florida,Georgia,Hawaii,Kansas,Kentucky,Maine,Maryland,New hampshire,New Mexico,Ohio,Oklahoma,and Washington.

This category encompasses complete aircraft and aircraft components. Notably,the United States exports Boeing commercial airplanes and Lockheed Martin F-16 fighters to the EU,showcasing the strength of the US aerospace industry.

The Pharmaceutical Pipeline: EU’s key Export to the US

On the import side, pharmaceutical products and medicines are the dominant category for eleven US states. These states include Delaware, Georgia, Illinois, Indiana, Kentucky, Missouri, North Carolina, Ohio, Pennsylvania, Tennessee, and Wisconsin. This reliance highlights the EU’s strength in the pharmaceutical sector and the US demand for these products.

Wheels of Commerce: Motor Vehicles a Significant Import

Motor vehicles and vehicle parts represent the second most significant import category, leading in eight states: Alabama, California, Maryland, Michigan, New Jersey, Rhode Island, South Carolina, and Texas. This reflects the strong presence of European automotive manufacturers in the US market.

According to the european Automobile Manufacturers’ Association (ACEA), the United States is the second-largest market for new EU vehicle exports, trailing only the united Kingdom. In 2024, the US accounted for 22% of the EU’s vehicle export market.

The United States is a crucial market for European automotive manufacturers, representing a significant portion of our export volume.

european Automobile Manufacturers’ Association (ACEA)

Tariff Impact: The Automotive Industry Under Pressure

The Center for automotive Research has conducted studies revealing the potential impact of tariffs on the automotive industry. Their findings suggest that the “Detroit Three” car manufacturers – General Motors, Ford, and Stellantis (formerly Chrysler) – could face an average tariff cost of $4,911 per imported vehicle. This figure surpasses the overall sector average of $4,239 per vehicle, indicating a disproportionate impact on these major domestic players.

Visualizing the Trade Landscape

The following table provides a comprehensive overview of the primary exports from each US state to the EU.