European Union (EU) and Tariffs

Trump’s comment that the EU is a “foe” from an economic point of view made me look into our trade relations with Europe.  It turns out that we have a consistently large trade imbalance with the EU every year.  Most people are aware of the gigantic trade imbalance with China that has persisted now for decades, but may not be so aware of this problem with the EU.  Here are the numbers for 4 years:
2014 276.3 billion
2015 271.9 billion
2016 269.5 billion
2017 283.3 billion
So what the above means is that, on a net basis, for those 4 years, over a trillion dollars has left our country and gone to the EU — quite literally, on a net basis, the US is 1 trillion poorer and the EU is 1 trillion richer.  Why is this happening?  Why is the US selling to Europe so much less than we are buying from them when the US, by any measure, has very good companies and very competitive products?  I suggest the problem occurs because of EU tariffs.  Actually, tariffs are almost a definition of what the EU really is.  For states that are members, the EU is a genuine free trade zone — there are no tariffs between member countries, that’s the whole point.  But for the rest of the world, including the US, the EU uses prohibitively high, protectionist tariffs to shield domestic industries of member states from foreign competition.
It will be interesting to see what impact there will be on the trade balance between the US and the EU if a genuine free trade agreement is put in place where there are no tariffs at all on either side so that American products will be unimpeded by EU tariffs and their products unimpeded by our tariffs — a completely level playing field.  Who knows — we may even see a trade surplus on the US side of the ledger.

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