The EU continued to experience strong trade headwinds in August, posting a dramatic drop in exports. During the same period, EU exports to the rest of the world fell to EUR 184 billion. Such a level would be the lowest in 43 months. This remarkable slump marks a year-on-year (y/y) downturn of 7%, underlining the continuing struggles for EU exporters.
The drop in exports has been most acute in top export markets, including the US as is shown in the following dashboard. Even that fell sharply in August, EU-27 merchandise exports to the U.S. plummeting to a dismal EUR 33 billion. That’s the lowest monthly total they have seen in four years. This figure represents a staggering 22% decrease from August of 2024. More significantly, it represents the continuation of that downward trend we’ve enjoyed for the last three months.
Germany, the EU’s largest economy, have been one of the hardest strikes by this export recession. The country has experienced a stunning 24% drop in exports from last year. This plunge was largely due to its over-dependence on the U.S. market, in particular industries such as automobiles and pharmaceuticals. Goods exports to the U.S. have fallen through the floor. The fall is now the largest contributing factor to the total drop in EU exports.
In January through July, EU exports had shown resilience with an increase of 14% compared to the same period in 2024, largely attributed to frontloading effects ahead of expected tariffs and trade disruptions. As the second half of the year develops, net exports will continue to be a drag on economic growth. It’s a trend that will almost certainly persist for the remainder of 2026.
There are a number of reasons behind this drop of EU exports. The strength of the euro has presented additional challenges for exporters, further complicating their ability to compete in global markets. U.S. tariffs of 15% on most goods, as stipulated in the EU-U.S. trade agreement, have begun to weigh heavily on EU exporters.
In spite of these hurdles, services exports are driving real momentum. Potentially, new trade routes could do this by offsetting the damaging effects of decreasing goods exports. Analysts are still worried about what this means for trade in the future, especially since exports to China are still very weak.
“EU-27 merchandise exports to the US fell to EUR 33bn in August, the lowest monthly reading in four years and 22% lower than in August 2024.” – Standard Chartered’s economist Christopher Graham