On August 21, 2020, United States Trade Representative Robert Lighthizer and then-EU Trade Commissioner Phil Hogan announced that the United States and the EU had agreed to a package of tariff reductions that will increase market access for hundreds of millions of dollars in U.S. and EU exports. These tariff reductions would be the first negotiated bilateral reductions in duties in more than two decades.
Under the agreement, the EU will eliminate tariffs on imports of U.S. live and frozen lobster products. U.S. exports of these products to the EU were over $111 million in 2017. The EU will eliminate these tariffs on a Most Favored Nation (MFN) basis, retroactive to begin August 1, 2020. The EU tariffs will be eliminated for a period of five years, and the European Commission will seek to make the tariff changes permanent. The United States will reduce by 50% its tariff rates on certain products exported by the EU worth an average annual trade value of $160 million, including certain prepared meals, certain crystal glassware, surface preparations, propellant powders, cigarette lighters and lighter parts. The U.S. tariff reductions will also be made on an MFN basis and be retroactive to August 1, 2020.
This bilateral tariff agreement, which the United States and the EU plan formally to implement in the fall of 2020, was the culmination of negotiations that intensified following a January 2020 meeting in Davos, Switzerland, between President Trump and European Commission President Ursula von der Leyen. U.S.-EU discussions on possible tariff reductions and on the removal of non-tariff barriers to transatlantic trade began in earnest in July 2018, when President Trump met at the White House with Commission President von der Leyen’s predecessor, Commission President Jean-Claude Juncker.
In 2019, at the direction of President Trump, the United States completed formal procedures necessary to launch negotiations on a trade agreement, as did the European Commission.
U.S. goods and services trade with the EU 27 totaled an estimated $1.1 trillion in 2019. Exports were $468 billion; imports were $598 billion. The U.S. goods and services trade deficit with the EU 27 was $130 billion in 2019.
U.S. Goods trade (exports plus imports) with the EU 27 totaled $720 billion in 2019. Goods exports totaled $268 billion; goods imports totaled $452 billion. The U.S. goods trade deficit with The EU 27 was $184 billion in 2019.
Trade in services with the EU 27 (exports and imports) totaled an estimated $346.2 billion in 2019. Services exports were $200 billion; services imports were $146 billion. The U.S. services trade surplus with the EU 27 was $54 billion in 2019.
U.S. goods exports to the EU 27 in 2019 totaled $267.6 billion, up 6.2 percent ($15.7 billion) from 2018 and up 53 percent from 2009. U.S. exports to the EU 27 account for 16.3 percent of overall U.S. exports in 2019.
- The top five U.S. export markets to the EU 27 in 2019 were: Germany ($60.1 billion), Netherlands ($51.1 billion), France ($37.7 billion), Belgium ($34.7 billion), and Italy (23.8 billion).
The top 5 U.S. export markets in the EU countries for 2018 were: United Kingdom ($66.2 billion), Germany ($57.7 billion), Netherlands ($49.4 billion), France ($36.3 billion), and Belgium ($31.4 billion).
- The top export categories (2-digit HS) in 2019 were: aircraft ($35.7 billion), mineral fuels ($28.9 billion), machinery ($26.4 billion), optical and medical instruments ($25.8 billion), and pharmaceuticals ($25.6 billion).
- U.S. total exports (domestic exports plus re-exports) of agricultural products to the EU 27 totaled $10.3 billion in 2019. Leading domestic export categories include: tree nuts ($2.9 billion), soybeans ($1.9 billion), planting seeds ($458 million), prepared food ($400 million), and wine & beer ($251 million).
- U.S. exports of services to the EU 27 were an estimated $200.3 billion in 2019, 5.0 percent ($9.6 billion) more than 2018, and 58 percent greater than 2009 levels. Leading services exports from the U.S. to the EU 27 were in the intellectual property (licenses to reproduce and/or distribute computer software), professional and management services, and travel sectors.
U.S. goods imports from the EU 27 totaled $452.0 billion in 2019, up 6.0 percent ($25.8 billion) from 2018, and up 93 percent from 2009. U.S. imports from the EU 27 account for 18.1 percent of overall U.S. imports in 2019.
The top five U.S. import suppliers from the EU 27 in 2019 were: Germany ($127.5 billion), Ireland ($62.0 billion), France ($57.6 billion), Italy ($57.3 billion), and Netherlands ($29.7 billion).
The top import categories (2-digit HS) in 2019 were: pharmaceuticals ($77.0 billion), machinery ($75.6 billion), vehicles ($44.2 billion), optical and medical instruments ($30.1 billion), and special other (returns) ($27.4 billion).
- U.S. total imports (general) of agricultural products from the EU 27 totaled $23.9 billion in 2019. Leading categories include: wine and beer ($6.3 billion), essential oils ($3.2 billion), snack foods ($1.7 billion), processed fruit & vegetables ($1.4 billion), and other vegetable oils ($1.3 billion).
- U.S. imports of services from the EU 27 were an estimated $145.9 billion in 2019, 9.1 percent ($12.1 billion) more than 2018, and 39 percent greater than 2009 levels. Leading services imports from the EU 27 to the U.S. were in the travel, transport, and intellectual property (including education) sectors.
- The U.S. goods trade deficit with the EU 27 was $184.3 billion in 2019, a 5.8 percent increase ($10.1 billion) over 2018.
- The United States has a services trade surplus of an estimated $54.4 billion with the EU 27 in 2019, down 4.5 percent from 2018.
- U.S. foreign direct investment (FDI) in the EU 27 (stock) was $2.4 trillion in 2019, a 2.8 percent increase from 2018. U.S. direct investment in the EU 27 is led by nonbank holding companies, manufacturing, and finance and insurance.
- The EU 27's FDI in the United States (stock) was $2.0 trillion in 2019, up 3.3 percent from 2018. The EU 27's direct investment in the U.S. is led by manufacturing, wholesale trade, and finance and insurance.
- Sales of services in EU 27 by majority U.S.-owned affiliates were $487.3 billion in 2017 (latest data available), while sales of services in the United States by majority EU 27-owned firms were $402.5 billion.