Europe's imports surge, trade surplus shrinks amid new US tariff reality

BRUSSELS (CN) — The European Union’s trade surplus with the rest of the world dropped sharply in June, with imports ballooning while exports stagnated, new data showed Monday, offering the first glimpse of how Europe’s economy is adjusting to U.S. President Donald Trump’s tariff regime.

The 27-nation EU posted an 8-billion-euro ($8.7 billion) trade surplus in June, down nearly 61% from the 20.3 billion ($22.1 billion) surplus recorded a year earlier, according to Eurostat, the bloc’s statistics office. The decline was driven by a 6.4% jump in imports while exports remained flat.

The month-to-month progression shows a sharp deterioration from May to June 2025: The EU surplus fell from 13.1 billion euros ($15.3 billion) in May to 8 billion euros in June, a drop of approximately 38.9%. While trade tensions with the U.S. contributed to weaker exports, the overall drop in the EU surplus is mainly driven by rising imports from multiple partners and sectoral factors, not solely by U.S. trade relations.

But the June figures, released weeks after Trump and EU leaders agreed to impose 15% tariffs on most European goods entering the U.S., underscore the economic pressures facing Europe as it navigates the new trade landscape. The data offers critical context for understanding how tariff threats may already be reshaping global commerce patterns.

EU imports from the U.S. rose 16.4% while exports dropped 10.3%, shrinking Europe’s trade surplus with its transatlantic ally from 18.4 billion euros ($21.56 billion) in May to 9.6 billion euros ($11.23 billion) in June 2025, reflecting the broader decline in the overall EU trade surplus during this period.

The timing of the data release is particularly significant. Three weeks ago, Trump and European Commission President Ursula von der Leyen struck a deal imposing 15% tariffs on most EU exports to America, averting the devastating 30% rate Trump had threatened.

While the June trade data predates that agreement, it captures a period when European businesses were already bracing for tariff impacts. The U.S. had been applying 10% tariffs on most EU goods since April, with automotive tariffs reaching 25%.

Under the July agreement, the EU also committed to purchasing $750 billion in U.S. energy over three years and investing $600 billion in American manufacturing facilities by 2029.

Energy remained Europe’s biggest trade weakness, with the bloc running a 23.4-billion-euro ($25.5 billion) monthly deficit despite improvement from last year’s 26.5-billion-euro ($28.9 billion) gap. The figures underscore Europe’s continued reliance on energy imports following the disruption of Russian supplies, creating a structural drag on the continent’s overall trade performance.

Trade with China in June showed a widening deficit for the EU, with exports falling 12.7% to 16.9 billion euros ($19.8 billion) while imports surged 16.7% to 46.4 billion ($54.4 billion), resulting in a trade gap of 29.5 billion ($34.2 billion), up from a 20.4-billion-euro ($23.9 billion) deficit a year earlier.

Europe’s traditional export strengths took the biggest hits. The chemicals sector, long a European powerhouse, saw its trade surplus fall from 19.1 billion euros ($20.8 billion) to 14.3 billion ($15.6 billion) year-over-year. Machinery and vehicles dropped from a 21.3 billion euros ($23.2 billion) surplus to 16.4 billion ($17.9 billion).

The eurozone, comprising 20 countries using the euro currency, fared even worse with its trade surplus plummeting from 20.7 billion euros ($22.5 billion) to just 7 billion ($7.6 billion) in June.

For the first half of 2025, the EU’s trade surplus totaled 80.1 billion euros ($87.3 billion), down from 92.9 billion ($101.2 billion) in the same period last year, suggesting the June weakness reflects a broader trend rather than a temporary blip.

The trade difficulties coincided with a sharp deceleration in European economic growth, suggesting tariff pressures created broader damage beyond export sectors. GDP growth in the eurozone slowed dramatically from 0.6% in the first quarter to just 0.1% in the second quarter — the period when US tariffs took effect and trade tensions peaked.

Germany, Europe’s largest economy and biggest exporter, contracted 0.1% in the second quarter after growing 0.3% in the first, highlighting how tariff pressures hit the continent’s economic engine.

The economic pain extended to other European factories, where industrial production fell 1.3% in the eurozone in June as manufacturers faced reduced demand from tariff-dampened export orders. The manufacturing of capital goods like machinery dropped 2.2%, mirroring the sector’s export struggles detailed in trade data.

The declining European competitiveness comes as Trump has framed tariffs as a tool to rebuild American manufacturing and reduce trade imbalances. However, the tariff strategy also carries costs for American consumers and businesses, who face higher prices on imported European goods ranging from machinery to chemicals. Some U.S. manufacturers that rely on European components have reported supply chain disruptions and increased production costs.

European leaders, meanwhile, face growing pressure to shield their economies from what German Chancellor Friedrich Merz called “considerable damage” from the tariff deal, even as he welcomed it for averting an all-out trade war. The European Commission has not ruled out potential countermeasures yet, including targeted tariffs on American agricultural products and expanded trade partnerships with Asia and Latin America to reduce dependence on U.S. markets.

Courthouse News correspondent Yuval Molina Obedman is based in Brussels, Belgium.