Top Products Driving the U.S.–EU Trade Deficit

The United States and the European Union are two of the world's largest economic powerhouses, and their trade relationship is one of the most significant globally. In 2024, the total value of U.S.-EU trade in goods and services was an estimated $1.5 trillion. However, the balance of this trade is not equal. The U.S. had a goods trade deficit of $235.9 billion with the EU in 2024, while it had a services trade surplus of $88.6 billion. The U.S. goods imports from the EU totaled approximately $605.7 billion in 2024.

So, what are the top products that are driving this trade deficit? Here's a look at the key imports from the EU that are tipping the scales.

No category looms larger in the U.S.–EU trade deficit than pharmaceuticals. In 2024, the U.S. imported roughly $127 billion worth of medicinal and pharmaceutical products from the EU — accounting for over one-fifth of all goods shipped across the Atlantic. The European Union supplied roughly 62% of all U.S. imports of medicinal and pharmaceutical products in 2024, underscoring Europe’s dominant role in meeting America’s drug demand.

Within the EU, Ireland towers above the rest, exporting about $65.7 billion worth of pharmaceuticals to the United States — nearly 28% of total U.S. pharmaceutical imports. This figure alone makes Ireland one of the single most important pharmaceutical trade partners for the U.S. Switzerland, though not an EU member, came in second with $19.3 billion (around 8.2%), while Germany ranked third with $17.4 billion (7.4%). Other European countries, such as Belgium, France, Italy, and the Netherlands, collectively filled out the remainder, together accounting for about 18% of U.S. pharmaceutical imports.

Ireland’s staggering share of U.S. imports is particularly noteworthy. It is not solely the result of production capacity but also of tax and intellectual property-driven accounting strategies. Many American pharmaceutical multinationals — including Pfizer, AbbVie, Merck, and Johnson & Johnson — route global revenues through Irish subsidiaries. This allows them to take advantage of Ireland’s favorable corporate tax regime while still supplying the U.S. market.

As a result, a large portion of what appears in trade data as “Irish exports” to the U.S. is often intra-company transfers tied to intellectual property holdings, rather than physical manufacturing flows alone.

The second-largest driver of the U.S.–EU trade deficit in 2024 came from machinery, reactors, boilers, and industrial equipment. American imports from Europe in this category totaled nearly $90 billion, making up about 15% of all U.S. goods shipped from the EU.

Why so much machinery? The answer lies in Europe’s reputation as the world’s engineering workshop. German firms like Siemens, Bosch, and Thyssenkrupp, Italian specialists in precision machine tools, and Dutch leaders in semiconductor equipment (notably ASML) dominate global markets for high-tech machinery. These aren’t commodities — they are highly specialized machines that few countries outside Europe can design or manufacture at scale.

For the United States, the reliance on European machinery reflects a trade-off. American firms excel in certain areas, such as aerospace or defense manufacturing, but in fields like precision industrial tools, semiconductor lithography, and energy-generation equipment, Europe maintains an edge. Many U.S. factories, from automotive plants in Michigan to chip fabs in Arizona, depend on European machines to operate at global standards.

Germany leads EU exports in this sector, shipping tens of billions worth of machinery to the U.S. annually. Italy, too, plays a vital role in supplying America’s advanced manufacturing hubs with the kind of highly customized equipment needed for niche production lines. Meanwhile, the Netherlands’ ASML is irreplaceable — its extreme ultraviolet (EUV) lithography machines are critical to producing cutting-edge semiconductors, and the U.S. has no domestic equivalent.

If there’s one European product category that most visibly fuels the U.S. trade deficit, it’s cars. In 2024, the United States imported around $60 billion worth of automobiles and parts from the European Union, making vehicles the third-largest contributor to the deficit.

The appeal of European cars in the American market is undeniable. German luxury brands such as BMW, Mercedes-Benz, Audi, and Porsche command strong consumer demand. Even beyond Germany, automakers like Sweden’s Volvo and Italy’s Ferrari and Maserati cater to niche segments, from premium SUVs to supercars. These imports reflect not only a taste for luxury but also Europe’s reputation for engineering excellence, safety standards, and design innovation.

Germany dominates this trade category. Roughly half of U.S. automobile imports from the EU originate there, with BMW and Mercedes alone exporting hundreds of thousands of units annually across the Atlantic. A significant share of these exports comes from Southern Germany’s Bavarian auto cluster, a region that has become synonymous with high-performance vehicles. Meanwhile, Slovakia and Hungary — major auto-assembly hubs for Volkswagen and Audi — also play growing roles, as supply chains expand eastward within the EU.

Another major category driving the U.S.–EU trade deficit in 2024 was electrical equipment, with imports totaling roughly $39 billion. This segment includes everything from industrial transformers and switchgear to household appliances, cables, and specialized electronic components.

Germany and the Netherlands anchor much of this trade. German firms such as Siemens and Bosch dominate in industrial power systems and automation equipment, while Dutch suppliers lead in high-value electronics and specialized components that feed into larger supply chains. France and Italy also contribute, particularly in grid technology, lighting systems, and consumer appliances. Together, these countries represent the bulk of U.S. electrical imports from Europe.

In 2024, the U.S. imported nearly $37 billion worth of these goods from Europe — not just cameras and lenses, but the high-precision instruments that power hospitals, laboratories, and advanced manufacturing plants. While the category sounds niche, it covers an essential set of products: high-precision lenses, microscopes, imaging systems, cameras, telescopes, and medical diagnostic devices. These are not consumer gadgets alone but critical tools for research labs, hospitals, and advanced manufacturing.

Europe’s strength in this field lies in its centuries-old tradition of optical engineering. Germany is the undisputed leader, with firms like Carl Zeiss, Leica, and Jenoptik setting the global standard in optical glass and imaging systems. France also plays a key role, particularly in aerospace optics and defense applications.

To address these widening trade deficits, President Trump has returned to one of his favorite words: tariff. In July 2025, Washington and Brussels struck a sweeping U.S.–EU trade deal that reset the terms of transatlantic commerce.

Most EU exports to the U.S. — including cars, machinery, and electrical goods — are now capped under a 15% tariff ceiling, replacing a patchwork of higher duties. But the deal isn’t just about restrictions. It includes carefully negotiated carve-outs: pharmaceuticals, generic drugs, semiconductor components, and aircraft parts fall under a “zero-for-zero” exemption, protecting vital industries from disruption. On the flip side, Europe agreed to sweeten the balance sheet by committing to $750 billion in long-term U.S. energy purchases and pledging $600 billion in new EU investments on American soil.

Why does the U.S. run such a large trade deficit with the EU?

Because the EU dominates in high-value industries — pharmaceuticals, machinery, luxury cars, electrical equipment, and optics — where U.S. domestic production is limited or less competitive. The U.S. relies heavily on these imports, while exporting fewer goods of similar value back to Europe.

Which EU country is the biggest contributor to the US-EU trade deficit?

Ireland leads by far, thanks to its role as a pharmaceutical hub (and tax base for U.S. drug giants), followed by Germany with cars and machinery, and the Netherlands with electronics and optical components.

Will the new U.S.–EU trade deal reduce the deficit?

Not overnight. The deal’s 15% tariff ceiling and Europe’s pledges for massive U.S. energy purchases will help at the margins, but Americans will still buy European cars and medicines. The structural deficit remains unless the U.S. builds competitive capacity in these industries.