Global headwinds challenge EU growth outlook
📉 EU Exports Under Pressure as Trade with United States and China Continues to Decline
According to a new report by Standard Chartered Bank, EU-27 merchandise exports to the United States fell to EUR 33 billion in August—the lowest monthly reading in four years and 22% lower than in August 2024. This marks the third consecutive month of year-on-year declines in export volumes and provides clear evidence that the 15% tariffs applied to most goods under the EU–United States trade agreement signed in late July are weighing heavily on EU exporters.
The decline in exports to the United States has been particularly severe for Germany, whose shipments fell 24% YoY in August. Germany’s strong export exposure in key sectors such as automobiles and pharmaceuticals has made it especially vulnerable to the new tariffs.
While EU exports from January to July were 14% higher than the same period in 2024—largely due to frontloading ahead of the trade deal—this surge has likely intensified the post-tariff slowdown. Analysts suggest that once inventories built up in the United States during H1 are drawn down, a partial recovery in export volumes may follow.
However, further downside risks remain, as ongoing Section 232 investigations in the United States could lead to additional sector-specific tariffs, placing more strain on EU trade.
The fall in exports to the United States has been the main driver behind the overall decline in EU exports to the rest of the world, which dropped to a 43-month low of EUR 184 billion (-7% YoY) in August. This reflects the growing importance of the United States market for EU exporters.
Meanwhile, EU exports to China have also been steadily declining, driven by weak consumer demand and intensifying competition from Chinese firms in industries traditionally dominated by European exporters.
The combined drop in exports to the United States and China pushed the EU’s merchandise trade balance into deficit in August. While periodic deficits are not uncommon, this was the largest monthly shortfall since April 2023. The deficit would have been even larger had EU imports not declined by approximately 5% YoY during the same period.
According to Standard Chartered’s analysis, net exports are likely to act as a drag on EU growth in the second half of the year and potentially throughout much of 2026. The strength of the Euro adds another layer of difficulty for export competitiveness. However, services exports and emerging trade routes may help offset some of the pressure.