Trade Policy: EU Should Be More Confident: The US Heavily Relies on Imports

The Institute of the German Economy (IW) recently published a study highlighting the significant dependence of the United States on imports from the European Union. This analysis, released on Thursday, underscores the critical role the EU plays in supplying key products to the US market.

The study reveals that the US is heavily reliant on EU imports, particularly in sectors such as chemicals and mechanical engineering, where alternatives are limited. Samina Sultan, an expert at IW, emphasized that the US has few substitutes for many essential products sourced from Europe. As the US continues its strategy to reduce dependency on China, the EU's importance as a trade partner grows even more critical. In 2024, the US sourced at least 50% of its imports in over 3,100 product categories from the EU, amounting to approximately $290 billion. Notably, nearly 46% of all US imports from the EU are in categories where Europe is difficult to replace.

The chemical sector alone represents over $47 billion in US imports, with specific organic chemicals and insulin preparations almost entirely sourced from Europe. The mechanical and electrical engineering sectors also reflect this dependence, with EU exports to the US reaching nearly $16 billion. This includes specialized machinery such as front-end loaders and performance switches, which are critical to US industries.

Given these dynamics, IW expert Samina Sultan argues that Europe is well-positioned to respond confidently to threats from Washington. The growing demand for European products, despite tariffs, suggests a robust opportunity for the EU to leverage its trade position. The EUR/USD exchange rate was trading at 1.179 USD with a slight decline of 0.26% at the time of this report's release on September 18, 2025. Analysts anticipate a target exchange rate of 1.24 USD, reflecting a potential 1% increase from the current rate. As the geopolitical landscape evolves, the EU's strategic role in global trade, particularly with the US, remains pivotal. The ability to supply indispensable products gives Europe a unique advantage and the potential to negotiate more favorable trade terms.