BLOG — July 24, 2025
EU trade tides: Front-loading to US eases in May
By Diego Iscaro and David Vagenknecht
As detailed in our EU-US Industrial Trade Vulnerability Dashboard, which tracks the total output at risk of US tariff action, the European Union’s merchandise trade surplus rebounded in May despite a further correction to the front-loading of exports to the US. The announcement of a 30% tariff applicable from Aug. 1 will likely lead to renewed front-loading of deliveries to the US market in July.
The improvement in the trade balance in May compared with the previous month was driven by a combination of a growing surplus in chemicals and other products and a narrowing deficit in energy. The trade balance in the remaining categories worsened in May.
Overall, both extra-EU merchandise exports and imports declined for a second consecutive month in May, but at a slower pace compared with April.
In the lead-up to the Aug. 1 deadline, we expect EU–US trade negotiations to regain momentum, with the European Commission favoring a negotiated solution. Even if these negotiations succeed in reducing the announced 30% levy, the likelihood of EU exporters facing higher US tariffs compared with our current baseline assumptions represents a key downside risk for our real GDP growth forecasts for the second half of 2025 and for 2026.
Trade surplus with the US rises in May as fall in imports outweighs declining exports
The geographical breakdown shows EU exports to the US, which account for over one-fifth of total extra-EU exports, declining by 2% month over month (seasonally and calendar adjusted) in May, following a 30.2% monthly deterioration the previous month related to the announcement of higher US tariffs in early April.
The largest declines in exports to the US occurred in machinery and vehicles (7.3% month over month) and other manufactured goods (5.1% month over month), with some of the products in this category affected by Section 232 US tariffs. In contrast, EU exports of chemical goods and energy, mostly exempt from the ‘reciprocal’ US tariffs, increased by 3.8% month over month and 1.6% month over month, respectively.
Meanwhile, EU imports from the US declined for the third consecutive month, falling by 5.2% month over month in May. Overall, the EU trade surplus with the US reached €18.4 billion, widening by more than €0.5 billion since April and by €4.2 billion when compared with May 2024.
While the deficit with mainland China continues to widen
EU goods imports from mainland China increased by 3.4% year over year, in non-seasonally adjusted terms, in May, while the bloc’s goods exports to mainland China fell by 11.2% year over year during the month. The EU’s trade deficit with mainland China increased to €27.5 billion, up from €23.9 billion in May 2024.
Looking at a longer period between March and May 2025, EU imports from mainland China saw an acceleration of 9.5% year over year. In contrast, EU exports to mainland China fell by over 12% year over year during the same period.
Elsewhere, the May trade data shows an increase in goods imports from other trading partners in Asia. Notably, in March–May 2025, EU imports from Vietnam and Malaysia rose by 19.2% year over year and 5.8% year over year (NSA), respectively.
The EU market will remain at risk of being exposed to a potential influx of goods imports from trading partners that are being redirected away from the US due to higher tariffs. The impact associated with a potential surge in cheaper imports from Asia is likely to vary by sector.
Marta Kaczmarek, Economist, S&P Global Market Intelligence contributed to this research
This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.