This was already evident when we saw the German and French trade data last week. For some context: US tariffs impact show up in German and French trade numbers, but is there a bigger worry?
Of note, German exports to the US last year plunged while French exports were steady at the balance after some frontrunning was done before the major hit on wines and spirits. Meanwhile, both countries also saw imports from China surge higher. And both those trends were once again the standouts in reading into the overall EU trade report.
The bloc's trade surplus for December fell to €12.9 billion, marking a drop from €14.2 billion in the same month a year ago. And as a whole for the year, the total trade balance for 2025 was €133.5 billion - down from €140.6 billion in 2024.
The breakdown in terms of trading partners pretty much tell the whole story:
The US remains the biggest export market for the EU. However, exports to the US declined considerably by 12.6% last year amid Trump's tariffs. And as a whole, that pushed down the EU's trade surplus with the EU by more than a third to just €9.3 billion.
Meanwhile, the bloc's trade deficit with China widened further amid a surge in imports by over 10%. The notional amount well covers the the over 11% surge in exports to China as well for last year.
As exports to the US drop and tariffs make it harder for EU firms to find customers, the bloc has to explore other options and has diversified well in that regard. But in terms of imports, it is clear that China is having a big impact in terms of penetrating the EU market.
That represents a bit of danger for the EU as net exports have been a key pillar for growth in the region but that will slowly lose its stature if prevailing trade conditions continue in the years ahead.
Besides that, the EU also has to be wary of the big picture impact of having to lean on China in trying to get by in these tough times amid US tariffs.
