European energy shift drives $5 billion monthly trade gain for US

BRUSSELS (CN) — Europe’s trade advantage over the U.S. shrank by another $5 billion in July, data released Monday shows, as a monthslong shift continued with Europeans buying significantly more American goods while exports across the Atlantic fell.

The European Union’s trade surplus with the U.S. fell to 13 billion euros ($14.3 billion) in July from 18 billion euros ($19.8 billion) a year earlier, according to official EU data. The shift represents the largest monthly deterioration in the trade relationship since U.S. President Donald Trump took office.

The eurozone — the 20 EU countries that use the euro currency — showed similar patterns, with its global trade surplus falling to 12.4 billion euros from 18.5 billion euros a year earlier.

European imports of U.S. goods surged 10.7% to 31.2 billion euros, while U.S. purchases of European products dropped 4.4% to 44.2 billion euros. The diverging trends signal a fundamental shift in one of the world’s most important trade relationships.

For the first seven months of 2025, Europe’s overall trade surplus with the rest of the world plummeted to 91.8 billion euros from 108.9 billion euros in the same period last year — a decline of 17.1 billion euros, reflecting broader competitiveness challenges.

The deteriorating U.S. relationship drove much of that decline. European exports to the U.S. have fallen as the dollar strengthened and American consumers shifted purchasing patterns, while Europeans are buying more American energy, technology and agricultural products.

European chemical companies — which produce everything from plastics to pharmaceuticals — saw their global trade surplus collapse from 22.2 billion euros to 16.6 billion euros compared to July 2024, a 5.6-billion-euro drop that largely reflects reduced U.S. demand.

Other European-manufactured goods also struggled, with the trade deficit in that sector widening from 1.9 billion euros to 3.1 billion euros.

Only machinery and vehicles — including German cars and industrial equipment — showed strength, with Europe’s surplus in that sector rising to 21.4 billion euros in July from 16.5 billion euros in June.

The trade deterioration reflects broader economic weakness across Europe, where second-quarter growth of just 0.1% lagged far behind the U.S. robust 0.8% expansion. European business investment plunged 1.8% in the second quarter while retail spending declined, reducing demand for U.S. products even as Europeans continued buying essential energy and technology.

Germany, Europe’s economic powerhouse, contracted 0.3% in the second quarter despite modest annual growth, directly impacting the chemicals and manufacturing sectors that traditionally drive European exports across the Atlantic.

The July figures represent a continuation of trade pressures that began when Trump imposed 10% tariffs on most EU goods in April, with automotive duties hitting 25%. As tensions escalated through the spring, Trump threatened to raise tariff rates to 30%, creating uncertainty that deepened the trade damage.

In June, the EU’s trade surplus had already plummeted 61% year-over-year to just 8 billion euros as businesses braced for potentially devastating tariff increases, with European exports to America falling 10.3% while imports surged 16.4%.

The July data suggest the bleeding continued even as Trump and EU leaders worked toward the trade agreement they would eventually reach on July 27, capping most tariffs at 15%.

The trade shift comes as Trump has intensified pressure on European allies to stop buying Russian oil and gas as a condition for stronger U.S. sanctions against Moscow. On Saturday, Trump wrote on a Truth Social post: “I am ready to do major Sanctions on Russia when all NATO Nations have agreed, and started, to do the same thing, and when all NATO Nations STOP BUYING OIL FROM RUSSIA.”

European officials bristled at Trump’s latest public ultimatum.

“We’re not going to comment on social media posts by the U.S. president,” a European Commission spokesman said curtly Monday when pressed about Trump’s demands during a Brussels briefing. “The successive sanctions packages we have brought forward are working. The economic evidence shows that they are having an impact on the Russian economy.”

The tensions reflect broader disagreements over sanctions coordination, with Trump’s assessment that European sanctions against Russia aren’t “tough enough.”

Energy has become a major factor in the changing trade relationship, with the United States now supplying 50.7% of Europe’s liquefied natural gas needs and serving as the bloc’s largest oil supplier at 15% of petroleum imports. European purchases of American liquefied natural gas have surged 113.5% in volume since 2021, a dramatic shift from when Russia provided 48% of EU natural gas and 29% of petroleum oil imports, compared to just 12% and 2% respectively by mid-2025.

European energy purchases from the U.S. totaled $76 billion in 2024, and the July 27 trade agreement commits the EU to buying $250 billion annually in U.S. energy over the next three years — more than tripling current import levels.

However, Trump has warned that tariffs could rise to 35% if the EU fails to meet its commitments, including an additional $600 billion in U.S. manufacturing investments.

The economic slowdown is beginning to affect European job markets, with employment growth slowing to 0.1% in both the eurozone and EU, down from 0.2% growth in the first quarter. Annual employment growth also slowed to 0.6% in the eurozone and 0.4% in the EU compared to the same period last year, according to separate EU data released Monday. About 219.9 million people were employed across the EU in the second quarter, with 171.6 million in the eurozone.

The labor market weakness extended to job openings, with European companies posting fewer available positions. The job vacancy rate fell to 2.1% across the EU in the second quarter, down from 2.4% a year earlier. Germany, Europe’s largest economy, saw its vacancy rate drop from 3.1% to 2.5%, while manufacturing job openings fell to just 1.6% across the EU, suggesting businesses are becoming more cautious about expansion plans amid trade uncertainties.

Trade between EU member states remained strong, rising 2.9% to 349.2 billion euros in July, suggesting Europe’s internal market continues functioning smoothly even as external trade weakens.

The U.S. represents Europe’s largest trading partner outside the European continent, making the relationship crucial for both economies. The European Union — a 27-country economic bloc that includes Germany, France, Italy and other major economies — operates as a single market larger than the United States. Unlike individual U.S. states, EU countries surrender their trade policy to Brussels, which negotiates on behalf of all members.

Courthouse News correspondent Yuval Molina is based in Brussels, Belgium.