EU trade surplus with US hits 5-year low as tariff truce unravels

BRUSSELS (CN) — Even before the Supreme Court struck down President Trump's tariffs and sent transatlantic trade relations into freefall, the EU's trade relationship with the United States was coming apart. Exports to the U.S. fell 12% in the fourth quarter of 2025, pushing the EU's bilateral surplus to a five-year low, according to data published Thursday by Eurostat.

The surplus fell to 31 billion euros ($36.5 billion) in Q4 — down from a peak of 81 billion euros at the start of last year and the lowest since Q2 2020. For the full year it came to 199.6 billion euros, the number Trump has long wielded as proof that Europe is gaming the system.

On Monday, the EU Parliament froze ratification of the Turnberry Agreement — the transatlantic tariff deal struck at Trump's Scottish golf resort last July — after fresh U.S. tariff moves blew past what both sides had agreed to.

Trump's new global tariff — currently at 10% but pledged to rise to 15%, rushed out after the Supreme Court struck down his previous tariff authority — is pushing duties on about 4.2 billion euros' worth of EU exports above the Turnberry ceiling, according to the EU's own assessment. They'll hit everything from cheese and butter — where combined levies on products like Gouda and Italian varieties now reach 25% — to plastics and chemicals. Not all sectors are worse off: Industries with low or zero existing tariffs, such as spirits, now face lower rates than Turnberry's flat 15% ceiling.

The numbers tell a story of a one-time rush followed by a hard landing. At the start of 2025, European exporters scrambled to get goods into the U.S. ahead of threatened tariffs, pushing exports up 25% in a single quarter — the sharpest spike since the pandemic recovery. That surge has since reversed hard — exports fell for three straight quarters, and accelerated in Q4.

At 115 billion euros, Q4 exports were the lowest in absolute terms since late 2020, during the Covid pandemic.

A surge in chemical exports in September — after the Turnberry framework granted zero-tariff treatment to pharmaceutical ingredients and chemical precursors starting Sept. 1 — partially cushioned Q3's decline. That buffer was gone by Q4, and so, as of this week, is Turnberry itself.

The sector picture

The product breakdown shows just how tangled the two economies are — and how much is now at risk. Pharmaceuticals dominated trade in both directions: Drugs and medicines comprised 29% of everything the EU shipped to the U.S., and 17% of what came back.

Cars, industrial machinery and electrical equipment made up the rest of the EU's top exports — though vehicle exports fell 20% last year to 42.5 billion euros, and the broader machinery surplus has been sliding since late 2023, from 29 billion euros a quarter to under 20 billion in Q4 2025.

On the U.S. side, fuels came second — petroleum and gas together accounting for nearly a fifth of EU imports from the U.S., a legacy of Europe's post-Ukraine pivot away from Russian energy.

That dual pharma dependence adds a pointed edge to the standoff — and it's deepening: EU imports of U.S. drugs rose 18% last year. Trump has floated tariffs on pharmaceutical imports as high as 250%, a move that would hit the EU's most valuable export while raising costs for U.S. patients. And the squeeze is specifically transatlantic: Since 2021, EU exports to the rest of the world outpaced those to the U.S., and exports to China are lower today than they were four years ago.

European exporters aren't struggling across the board. It's the relationship with Washington that's breaking down.

Two sides, no clarity

Brussels is trying to hold the line. Speaking to the European Parliament's trade committee on Tuesday, Trade Commissioner Maroš Šefčovič said U.S. counterparts had "reassured" him they stood by the deal, and that a March plenary vote "must remain our target" — provided Washington offers "more clarity." Pharmaceuticals, aircraft and energy remain exempt from the new surcharge, he noted, limiting some of the immediate damage.

U.S. Trade Representative Jamieson Greer was less reassuring. "Right now, we have the 10% tariff. It'll go up to 15% for some and then it may go higher for others," he said Wednesday, adding that Washington would "accommodate" countries with trade deals — without saying what that means for the EU.

Asked whether the Supreme Court ruling had voided the deal's legal basis entirely, European Commission — the EU's executive body — spokesperson Olof Gill was blunt: "That's what the Americans have to explain to us."

In his State of the Union address Tuesday, Trump called the Supreme Court ruling "very unfortunate" and pledged to institute new tariffs under authorities he said were "time tested and approved."

The legal fallout adds another layer of uncertainty. Over 900 companies have sued the U.S. government for refunds on tariffs collected under the now-invalidated IEEPA authority, with potential refunds estimated at over $160 billion. FedEx became the first major firm to file on Monday. Democrats have pledged to block any extension of the Section 122 tariffs when they expire in 150 days.

Longer-term, Brussels is eyeing the next wave. The administration is preparing Section 232 national security investigations into batteries, industrial chemicals, plastics and electrical equipment — top EU export categories that Turnberry never covered, and where tariffs carry no time limit or rate cap.

And the pressure isn't only coming from Washington. Šefčovič told lawmakers the EU's trade deficit with China reached 360 billion euros in 2025 — nearly double the surplus with the U.S. — as Chinese manufacturers push into higher-value sectors and crowd out European firms in third markets. The EU isn't even buying more from China than it was three years ago; the deficit has swelled because what China sells has moved upmarket.

The EU is squeezed on both sides: a fracturing relationship with its biggest export market and a deepening hole with its biggest import partner. Whatever comes next with Washington, Thursday's data makes clear it will land on an already shaky foundation.

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