September 26, 2025
The EU can stand up to Washington
The U.S. is more reliant on European goods than many believe.
To the point!
Given the ongoing transatlantic tensions, it's very likely that there will soon be another round of high-level negotiations on trade relations
Following the handshake deal between the EU and the U.S. on a Scottish golf course in late July, the European Commission faced a flood of criticism: Capitulation! Humiliation! Dictated peace! (see Fig. 1). Those reactions are understandable, but let’s remain fair: Commission President Ursula von der Leyen had anything but an easy task.
Which sentiment do you feel when thinking about the EU-US-trade deal?
Fig. 1 (in %)
Survey conducted in early September 2025, 5,302 respondents across five EU countries, excluding 'Other' responses.
Dissatisfaction in the EU over trade agreement.
The EU member states were – and this is, sadly, no surprise – divided once again over what course the EU should take. Particularly the governments of export-dependent economies like Germany and Italy were eager to avoid escalation at nearly any cost. Meanwhile, Paris and Madrid advocated for a more robust response. In the end, the Commission tried to square the circle and actually did so quite cleverly: the EU made hollow promises to the U.S. President, pledging to import $750 billion worth of energy from the U.S. and to invest $600 billion directly in the U.S.- economy. This allowed Donald Trump to boast to his supporters back home and – once more – present himself as the ultimate winner. He even claimed he could now hand-pick which European investments would be made in America. I wonder whether European entrepreneurs second that emotion.
The EU-U.S. trade deal is full of misunderstandings
It didn’t take long for it to become clear that Washington and Brussels had very different interpretations of what was agreed in Scotland. That is unsurprising. Stable trade agreements are typically hammered out over extended periods, sometimes years, with technocrats negotiating every last detail. They don’t come overnight.
Washington, for instance, believed the EU had lowered its food safety standards for meat and dairy products, paving the way for easier imports from the U.S. Brussels, on the other hand, was taken aback by this interpretation and merely stated that it was open to streamlining sanitary certificates (essentially forms). Trump also assumed that the EU would relax regulations on digital services – something that, according to the Commission, wasn’t even discussed. Unsurprisingly, the White House reacted by threatening new tariffs after the EU Commission imposed a fine of nearly €3 billion against Google over abusive practices in online advertising technology. In mid-August, Trump had already extended U.S. tariffs on steel and aluminum to include products containing those metals. Spare a thought for the customs officers in the U.S., now tasked with determining whether the declared value of the metal components in finished products is accurate or not.
Many questions remain open.
Europe is no underdog in trade negotiations
Given the ongoing transatlantic tensions, it’s very likely that there will soon be another round of high-level negotiations on trade relations. And it’s understandable that many observers might assume Europe sits at a disadvantage. After all, while Europe depends heavily on its open economy, U.S. exports account for little more than 10% of American GDP. And, of course, European companies export more to the U.S. than vice versa.
However, as a new study from the German Economic Institute (IW) shows, the EU is far from a helpless pawn at the mercy of the MAGA administration. Both sides are deeply interdependent. Today, the EU ranks as the United States’ largest source of imports – surpassing China, as well as its neighbors Mexico and Canada (see Fig. 2). The United States imports an array of products from the EU that cannot easily be substituted.
Share of total U.S. imports
Fig. 2 (in %)
According to IW researchers Samina Sultan and Jürgen Matthes, the number of goods categories where more than 50% of imports are of European origin has grown significantly over time (see Fig. 3), reaching $287 billion last year. U.S. companies are particularly reliant on EU imports in sectors like chemicals, machinery, and electrical equipment. Even strategically important defenserelated products are on the list of U.S. import dependencies.
Fig. 3: US-import dependency from EU
Product groups with a minimum of xx% US-import share from the EU
out of a total 1,780 product categories.
Additionally, as Washington has been deliberately working to reduce its dependence on China for years, its reliance on imports from Europe has increased as a result (see Fig. 2). U.S. exports to Europe have become a critical – and growing – part of American value chains and are in some cases even strategically indispensable. If renegotiations on transatlantic trade resume – and I fully expect they will – the EU should not sell itself short and become more assertive. The EU’s economic strength makes it an equal partner to the U.S. – and it’s time to act like one!
Dr. Moritz Kraemer, Chief Economist / Head of Research at LBBW
Download To the point!
-
1.2 MB | September 26, 2025
This publication is addressed exclusively at recipients in the EU, Switzerland, Liechtenstein and the United Kingdom.
This report is not being distributed by LBBW to any person in the United States and LBBW does not intend to solicit any person in the United States.
LBBW is under the supervision of the European Central Bank (ECB), Sonnemannstraße 22, 60314 Frankfurt/Main (Germany) and the German Federal Financial Supervisory Authority (BaFin), Graurhein-dorfer Str. 108, 53117 Bonn (Germany) / Marie-Curie-Str. 24-28, 60439 Frankfurt/Main (Germany).
This publication is based on generally available sources which we are not able to verify but which we believe to be reliable. Nevertheless, we assume no liability for the accuracy and completeness of this publication. It conveys our non-binding opinion of the market and the products at the time of the editorial deadline, irrespective of any own holdings in these products. This publication does not replace individual advice. It serves only for informational purposes and should not be seen as an offer or request for a purchase or sale. For additional, more timely in-formation on concrete investment options and for indi-vidual investment advice, please contact your investment advisor.
We retain the right to change the opinions expressed herein at any time and without prior notice. More-over, we retain the right not to update this information or to stop such updates entirely without prior notice.
Past performance, simulations and forecasts shown or described in this publication do not constitute a reliable indicator of future performance.
The acceptance of provided research services by a securities services company can qualify as a benefit in supervisory law terms. In these cases LBBW assumes that the benefit is intended to improve the quality of the relevant service for the customer of the benefit recipient.
Additional Disclaimer for recipients in the United Kingdom:
Authorised and regulated by the European Central Bank (ECB), Sonnemannstraße 22, 60314 Frank-furt/Main (Germany) and the German Federal Financial Supervisory Authority (BaFin), Graurheindorfer Str. 108, 53117 Bonn (Germany) / Marie-Curie-Str. 24-28, 60439 Frankfurt/Main (Germany). Authorised by the Prudential Regulation Authority. Subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. Details about the extent of our regulation by the Prudential Regulation Authority are available from us on request.
This publication is distributed by LBBW to professional clients and eligible counterparties only and not retail clients. For these purposes, a retail client means a person who is one (or more) of (i) a client as defined in point (7) of Article 2(1) of the UK version of Regulation (EU) 600/2014 which is part of UK law (UK MiFIR) by virtue of the European Union (Withdrawal) Act 2018 (EUWA) who is not a professional client (as defined in point (8) of Article 2(1) of UK MiFIR); or (ii) a customer within the meaning of the provisions of the Financial Services and Markets Act 2000 (as amended, the FSMA) and any rules or regulations made under the FSMA (which were relied on immediately before the 31 December 2020 (IP completion day)) to implement Directive (EU) 2016/97 on insurance distribution, where that customer would not qualify as a professional client, as defined in point (8) of Article 2(1) of UK MiFIR; or (iii) not a qualified investor as defined in the UK version of Regulation (EU) 2017/1129 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, which is part of UK law by virtue of the EUWA (the UK Prospectus Regulation).
This publication has been prepared by LBBW for information purposes only. It reflects LBBW’s views and it does not offer an objective or independent outlook on the matters discussed. The publication and the views expressed herein do not constitute a personal recommendation or investment advice and should not be relied on to make an investment decision. The appropriateness of a particular investment or strategy will depend on an investor’s individual. You should make your own independent evaluation of the relevance and adequacy of the information contained in this publication and make such other investigations as you deem necessary, including obtaining independent financial advice, before partici-pating in any transaction in respect of the financial instruments referred to this publication herein.
Under no circumstance is the information contained within such publication to be used or considered as an offer to sell or a solicitation of an offer to buy any particular investment or security. Neither LBBW nor any of its subsidiary undertakings or affiliates, directors, officers, employees, advisers or agents accepts any responsibility or liability whatsoever for/or makes any representation or warranty, express or implied, as to the truth, fullness, accuracy or completeness of the information in this publication (or whether any information has been omitted from the publication) or any other information relating to the, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of this publication or its contents or otherwise arising in connection therewith.
The information, statements and opinions contained in this publication do not constitute or form part of a public offer. LBBW assumes no responsibility for any fact, recommendation, opinion or advice con-tained in any such publication and expressly disclaims any responsibility for any decisions or for the suitability of any security or transaction based on it. Any decisions that a professional client or eligible counterparty may make to buy, sell or hold a security based on such publication will be entirely their own and not in any way deemed to be endorsed or influenced by or attributed to LBBW.
LBBW does not provide investment, tax or legal advice. Prior to entering into any proposed transaction on the basis of the information contained in this publication, recipients should determine, in consultation with their own investment, legal, tax, regulatory and accounting advisors, the economic risks and merits, as well as the legal, tax, regulatory and accounting characteristics and consequences, of the transac-tion.
