EU trade surplus with US rises to more than €11bn

The European Union’s trade surplus with the United States continued to rise in January, further underlining tensions between Brussels and Washington.

US president Donald Trump is unhappy with the size of the surplus, and has already imposed tariffs on European steel and aluminium. But he has also threatened to impose them on Europe’ much larger cars and car parts industry.

Monday’s data from Eurostat may therefore be a cause of concern for some: in non-seasonally adjusted terms, the surplus in goods traded with the US expanded to €11.5bn in January, up from €10.1bn a year earlier.

Holger Schmieding, chief economist at Berenberg, said: “Tariffs, to which the EU would respond in kind, would be a massive escalation of the trade tensions between the two biggest economic powers of the world. The could severely damage economic growth on both sides of the Atlantic.

However, he added: “On balance, we maintain our view the US and EU will find a compromise on trade and avert such a calamity.”

Strikingly, the EU’s deficit with China meanwhile increased to €21.4bn from €20.8bn a year previously.

Perhaps for that reason, and even amid the trade spat with the US, towards the end of March, Chinese President, Xi Jinping, was scheduled to visit Paris, Rome and Monaco for trade talks.

Overall, and in seasonally adjusted terms, the EU trade deficit in goods was €6.0bn, down on January 2018’s figure of €6.2bn. The Eurozone saw its trade surplus increase from December's upwardly-revised €16.0bn (Preliminary: €15.6bn) to €17.0bn for January (consensus: €15.0bn), as exports bounded ahead of imports.

Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said: “A 0.8% increase in [seasonally adjusted] exports offset a 0.3% rise in imports, to deliver a decent start to the year for Eurozone net exports. The rise pushed the surplus to its highest level since May last year, before the chaos in Germany around the new EU emissions regulation in the auto sector.

“A slowdown in exports to Asia and the UK have been the primary drivers of the falling Eurozone economy’s trade advantage in goods in the past 12 months, offsetting continued strength in exports to the US sand leading indicators suggest that global trade volumes remain subdued at the start of the year.”