EU-US Trade Hit a Record €875 Billion in 2025, but Automotive Exports Collapsed 20%

The German Economic Institute (IW) published a landmark study on July 3, 2026, examining EU-US trade in 2025. The headline figure — a record €875 billion in goods trade — tells only half the story. Beneath the surface, the data reveals severe sectoral damage, particularly to Europe’s automotive industry, and a trade truce that ultimately collapsed within months.

Record Total Goods Trade Masked Deep Sectoral Pain

EU-US goods trade reached €875 billion (~$1.00 trillion) in 2025, a record despite year-long tariff upheaval . EU goods exports to the US rose 7.7% to €580 billion, while US imports into the EU climbed 2.2% to €295 billion, widening the EU’s trade surplus to nearly €285 billion .

Services trade also hit €865 billion, but here the EU ran a deficit with the United States .

But the IW study stresses that these aggregate numbers obscure deep sectoral fractures:

• Auto exports plunged 20.4% — EU exports of cars and car parts fell by more than a fifth, the single largest sectoral loss . Germany, which accounts for nearly two-thirds of Europe’s car exports to the US, saw its shipments drop 18.9% . A separate IW report from December 2025 found German auto exports to the US had already fallen nearly 14% in the first three quarters alone .
• Pharmaceutical exports surged, driven largely by Irish pharma exports, which inflated the headline goods total even as the auto sector collapsed .
• Steel and machinery faced headwinds from the 25% Section 232 tariffs on steel and aluminum imposed on March 12, 2025 .

The US Tariff Timeline in 2025

The year saw a rapid series of tariff actions before a fragile deal was reached mid-year:

Date	Action
March 12, 2025	US imposed 25% tariff on steel and aluminum (Section 232)
April 3, 2025	US imposed 25% tariff on imported automobiles (Section 232)
April 5, 2025	US imposed 10% baseline tariff; additional "reciprocal" tariffs followed
July 27–28, 2025	EU and US reached a preliminary trade deal in Turnberry, Scotland: a single all-inclusive 15% tariff ceiling on most EU goods, including autos, auto parts, pharmaceuticals, and semiconductors . Steel, aluminum, and copper tariffs (50%) remained unchanged .
August 1, 2025	15% tariff on EU autos and auto parts formally took effect, retroactively applied from August 1 .

The July deal averted a broader trade war. In return, the EU agreed to eliminate duties on imports of US industrial goods . However, the agreement was not legally binding, a fact that would prove critical .

2026 Reversals: The 15% Deal Collapses

The 15% tariff ceiling did not hold. By early 2026, the trade war reignited:

• February 20, 2026: The US Supreme Court issued a ruling invalidating the legal basis for many existing tariffs. The Trump administration responded by introducing a new 10% global tariff, with a potential increase to 15% .
• May 2026: President Trump announced a return to 25% tariffs on EU vehicles, catching Brussels off guard and reigniting negotiations .
• Early 2026 EU export drop: EU exports to the US fell sharply. By February 2026, EU exports had dropped by more than 25% for the second consecutive month . The EU’s trade surplus with the US also shrank by over 60% .

Economists caution that part of this drop reflects front-loading of exports in 2025 and euro appreciation, not solely the tariff hikes . But the volatility itself has created deep uncertainty for transatlantic supply chains.

The IW Study's Core Message

The IW study’s bottom line is clear: record headline trade figures mask serious underlying damage, particularly to the German automotive industry . The tariff rollercoaster — from the initial 25% auto tariff in April 2025, to the 15% July deal, to the 2026 reversals — has made long-term planning nearly impossible for manufacturers on both sides of the Atlantic.

A separate IW study from September 2025 had already warned that US import dependence on the EU was rising, outpacing China over the last 15 years . That interdependence, the IW argues, makes the current tariff volatility particularly damaging: both sides are too intertwined to benefit from a prolonged trade war, yet the tariff shocks keep multiplying.