You’ve probably heard the term "transatlantic relationship" a million times in boring news segments. Most people tune it out. But honestly, US trade with the EU is the only reason your iPhone costs what it does and why your favorite German car isn't twice the price. It is the largest bilateral trade and investment relationship in the world. Period. We aren't just talking about buying and selling stuff; we’re talking about two economies so deeply intertwined that if one sneezes, the other gets a literal pneumonia.
It’s huge.
In 2024, the numbers were staggering, with goods and services trade totaling well over $1.3 trillion. But here is the thing: it’s not just a smooth highway of commerce. It’s more like a multi-lane freeway where everyone is speeding, half the drivers are arguing about the map, and there’s a persistent fog of regulations making everything complicated.
The Reality of US Trade With the EU Right Now
Money moves. Goods move. But lately, the vibes have been... tense.
For decades, the US and the EU were the "Gold Standard" of global trade. We set the rules. Everyone else followed. Now? We are seeing a massive shift toward "economic statecraft." This is basically a fancy way of saying that trade isn't just about business anymore; it’s about national security and climate change.
Look at the Inflation Reduction Act (IRA). When the US passed this, European leaders like Emmanuel Macron basically lost their minds. Why? Because the US started offering massive subsidies for green tech, but only if that tech was made in North America. To the EU, this felt like a betrayal. It felt like the US was sucking investment away from European shores.
The EU responded with its own Green Deal Industrial Plan. It’s a bit of a "subsidy race" to the bottom, or the top, depending on who you ask.
💡 You might also like: Stock Market News September 5 2025: What the Jobs Report Actually Means for Your Portfolio
Why the "Trade Deficit" is a Distraction
Politicians love to scream about the trade deficit. "We buy more from them than they buy from us!" they shout. In the case of US trade with the EU, the US does indeed run a significant goods deficit—often hovering around $200 billion annually.
But looking at the goods deficit alone is like judging a restaurant only by its appetizers.
You have to look at services. The US is a service-exporting powerhouse. Think digital services, intellectual property, financial consulting, and movies. When you factor in services and the profits from US companies based in Europe (like Google, Amazon, and Pfizer), the "deficit" looks a lot more like a partnership.
Also, consider Foreign Direct Investment (FDI).
US companies have invested trillions into the EU—way more than they've invested in China. In fact, US investment in a tiny country like Ireland often exceeds its investment in many larger emerging markets combined. Why? Tax reasons, sure, but also because the legal systems are predictable. Businesses hate surprises.
The Steel, Aluminum, and Car Wars
If you want to understand the friction in US trade with the EU, you have to look at the "forever wars" of trade: steel and aluminum.
Back in the Trump administration, Section 232 tariffs were slapped on European steel and aluminum based on "national security" grounds. The EU was insulted. Are French aluminum and German steel really a threat to American security? They didn't think so. They retaliated with tariffs on iconic American goods: Harley-Davidson motorcycles, Kentucky bourbon, and Levi’s jeans.
The Biden-Harris administration reached a "truce" known as the Global Arrangement on Sustainable Steel and Aluminum.
💡 You might also like: Jordanian Dinar to USD Conversion: Why the Exchange Rate Rarely Budges
It sounds nice. But it's actually just a temporary pause.
The US and EU are trying to figure out how to tax steel based on how "dirty" it is (carbon intensity). The problem? The US doesn't have a national carbon price, while the EU has the Carbon Border Adjustment Mechanism (CBAM). This is a massive headache for exporters. If you’re a US manufacturer sending parts to Italy, you might soon face a "carbon tax" at the border because the US doesn't regulate carbon the same way the EU does.
Tech, Privacy, and the Great Digital Divide
This is where things get really spicy.
The EU is the world’s "Regulatory Superpower." They have the GDPR (privacy), the Digital Markets Act (DMA), and the Digital Services Act (DSA). They are basically the world's police for Big Tech. Since most Big Tech is American, the US government often sees these European laws as a direct attack on American companies like Apple and Meta.
The AI Act
The EU just passed the world's first comprehensive AI law. It’s strict. It bans certain types of AI and puts heavy requirements on "high-risk" systems.
US tech leaders are worried this will stifle innovation.
US policymakers are worried this will give a leg up to Chinese competitors who don't care about ethics or privacy.
And then there’s the Data Privacy Framework.
For years, companies struggled to move data across the Atlantic because European courts kept striking down the deals (remember the Schrems I and Schrems II cases?). They finally have a new agreement, but it’s already being challenged in court. If this fails, the digital side of US trade with the EU could literally grind to a halt. Imagine a world where your European office can't access the US-based HR software. It’s a mess.
Agriculture: The Unstoppable Force Meets the Immovable Object
If you want to see a trade negotiator cry, mention "chlorinated chicken" or "hormone-treated beef."
The US wants to sell its massive agricultural surplus to Europe.
The EU says "no thanks" to anything involving GMOs or specific chemical washes that are standard in the US.
To Americans, these are "non-scientific trade barriers."
To Europeans, these are "food safety and consumer protection."
We’ve been fighting about this for forty years. Don't expect it to change tomorrow. In fact, as the EU moves toward its "Farm to Fork" strategy—which aims to reduce pesticide use and increase organic farming—the gap between US and EU farming standards is actually getting wider.
What This Means for the Average Business
If you’re running a business—or even just investing in the stock market—the state of US trade with the EU matters for three big reasons:
- Supply Chain Resiliency: After the pandemic and the invasion of Ukraine, "friend-shoring" is the new buzzword. Companies are moving supply chains out of China and back to "friendly" nations. The EU is the ultimate "friend," but the high energy costs in Europe (caused by the loss of Russian gas) make it an expensive place to manufacture.
- Regulatory Compliance: If you sell anything digital or physical to Europe, you are now a "global" company subject to EU law. You can't just ignore it. The "Brussels Effect" means EU laws often become the default global laws.
- Currency Fluctuations: The Euro-Dollar exchange rate is the heartbeat of this trade. When the Dollar is strong, US exports to Europe get hammered. When the Euro is weak, European goods flood the US market.
The China Factor
There is one thing that is forcing the US and EU to play nice: China.
Both sides are worried about China's "overcapacity." Basically, China is producing way more EVs, solar panels, and wind turbines than its own people can buy, so it’s dumping them on the global market at low prices.
The US has responded with 100% tariffs on Chinese EVs.
The EU has launched its own anti-subsidy investigations.
While the US and EU bicker over airplane subsidies (the 17-year-long Boeing vs. Airbus saga finally ended with a five-year truce in 2021), they realize that if they don't cooperate, they both lose to China. This "common enemy" is currently the strongest glue holding US trade with the EU together.
What You Should Do Next
The landscape of US trade with the EU is shifting from "free trade" to "managed trade." It is no longer about just removing tariffs; it is about navigating a thicket of environmental, digital, and security rules.
Watch the Carbon Border Adjustment Mechanism (CBAM). If you are an exporter, this is the biggest sleeper issue of 2025 and 2026. If your products have a high carbon footprint, your margins in the EU are about to disappear. You need to start auditing your supply chain’s carbon intensity now.
Diversify, but stay close. The Transatlantic economy is still the safest bet for long-term stability. Despite the regulatory headaches, the "rule of law" in the US and EU is a luxury you won't find in many other high-growth markets.
✨ Don't miss: Orthopedic Digital Marketing Agency: Why Most Practices Are Just Burning Cash
Monitor the TTC. The US-EU Trade and Technology Council (TTC) is where the real work happens. It’s a boring name, but this is where the two sides are trying to align on things like 6G, AI standards, and export controls. If the TTC fails, expect more trade wars. If it succeeds, we might actually see a "transatlantic marketplace" that can compete with anyone.
The days of easy, frictionless trade are over. The days of strategic, complex, and highly regulated trade are here. Adjust your expectations accordingly.
Actionable Insights for Navigating Transatlantic Trade:
- Audit for EU Compliance Early: Don't wait for a product launch to realize your data handling or chemical standards don't meet EU directives. The cost of retrofitting compliance is ten times higher than building it in.
- Hedge Currency Exposure: With the volatility in energy prices and shifting interest rates between the Fed and the ECB, the USD/EUR pair will remain jumpy. Use forward contracts to lock in your margins.
- Lobby Collectively: Individual small businesses get crushed by trade shifts. Join industry groups like the American Chamber of Commerce to the EU (AmCham EU) to stay ahead of legislative shifts before they become law.
- Focus on Services: If you can pivot your business model from selling physical goods to selling digital services or licensing, you bypass many of the physical "border" headaches that plague US trade with the EU.