Trade relations between the U.S. and the European Union (EU) hit a bit of a rough patch in recent years. Former President Donald Trump and his administration imposed tariffs on many goods made in Eurozone countries. Trade relations between otherwise friendly regions can take a turn for the worse if a nation feels that a key industry is threatened by unfair practices abroad. Take the case of support for domestic airline manufacturers. The Trump Administration had proposed additional duties on EU exports worth $11 billion in retaliation for the bloc granting aircraft manufacturer Airbus what they viewed as illegal subsidies.
The World Trade Organization (WTO) did end up ruling that the subsidies had an adverse impact on the U.S. by causing an Airbus rival, Boeing Co. (BA), to lose sales in an uncompetitive manner. The WTO also ruled that the EU failed to comply with its rulings, paving the way for the U.S. to impose countermeasures. In 2019, the U.S. was awarded $7.5 billion as compensation. But then in 2020, the EU was authorized, in turn, to impose tariffs of $4 billion due to illegal subsidies granted by the U.S. government to Boeing. The list of EU products covered by additional duties included aircraft, helicopters, and fuselages from France, Germany, Spain, and the U.K., in addition to a variety of non-airline-related items like cheeses, fruits, jams, wines, and yarns from any of the 28 member states of the Eurozone.
The airline example is a good one, since it proved disruptive to the larger context of international trade between the U.S. and EU. Indeed, the EU is one of America’s largest trading partners, accounting for $658 billion worth of goods trade in 2020. While the U.S. exported $237.9 billion worth of goods from the EU, imports from the EU. amounted to $420.1 billion, making the trade deficit $182.1 billion, the highest ever on record, according to the U.S. Census Bureau.
Indeed, the Biden administration has sought to undo many of the harmful tariffs imposed by Trump. For instance, a deal was reached in October of 2021 to roll back much of the recent tariffs on European aluminum and steel.
Let's take a closer look at trade between these two important regions of the Western World.
- The EU is one of the largest and most important trading partners with the USA; and America is the EUs largest trading partner.
- In the U.S., Texas and California are the two largest importers of European goods; while Germany and the Netherlands are the largest importers of American products.
- Despite the large volume of trade between the two regions, tariffs and protectionism can lead to harmful trade spats.
Top Imports From the European Union
At the top of the list for imports from across the Atlantic Ocean are pharmaceuticals. In 2020, U.S. pharmaceutical imports from the EU were roughly $80 billion.
Machinery, excluding electrical and computer equipment, was the second-largest component of EU imports for the U.S., at $75 billion. This category includes agricultural and industrial machinery, as well as engines and turbines.
Motor vehicle-related imports were equal to $27 billion and accounted for around 10% of all goods that were imported from the EU. This category includes cars, motor vehicle bodies, and trailers, and car parts.
Trade between the U.S. and EU dipped in 2020 compared to earlier years due to the COVID-19 pandemic, which affected international trade around the world.
Top Exports to the EU
In 2020, the U.S's largest export to the EU were aerospace products and parts, at $35.7 billion. That was followed by mineral fuels, worth $28.9 billion, and machinery, worth $26.4 billion. The next most imported manufactured goods were machinery & vehicles (38 %), followed by chemicals (25 %) and other manufactured products (18 %).
Top State Trade
In terms of the exports of goods, in 2020, Texas ranked highest in terms of the export of goods to the EU, at $37.9 billion. Texas was followed by California, at $30.0 billion. South Carolina, Illinois, and Georgia came next in line, with trade volumes of $9.6 billion, $8.8 billion, and $8.3 billion, respectively. Wyoming, Montana, and Hawaii are the states that saw the lowest volume of trade of goods with the EU in 2020.
For 2020, the three largest importers from the U.S. in the EU were Germany, the Netherlands, and France.