US Tariffs and the slide of the US dollar against the euro is handicapping European Union exports to the US.
The slide in the dollar against the euro is not a recent trend, the latter, currency now adopted by 21 of the EU’s 27 members, having appreciated by 13% against the greenback last year.
However, at the end of January, the single European currency crossed the symbolic threshold of $1.20 for the first time since June 2021, although it has ceded a little ground in February.
The headwinds appear particularly acute for exporters in the automotive, mechanical engineering and capital goods sectors.
A Turning Point in Trade?
Germany, by far, the eurozone’s biggest exporter, has significant trade with the US — it was valued at more than $160 billion in 2024 — driven by automobiles and machinery and other industrial products such as chemicals, pharmaceuticals, and electronics. An estimated 55% of German exports to the US consist of capital goods and intermediates.
Earlier this month, figures from Germany’s Federal Statistical Office (Destatis) revealed that the country’s exports to the US in December totaled €11.8 billion ($14 billion), after seasonal and calendar adjustment.
This represented an increase of 8.9% versus the previous month but when compared with December 2024 exports were down 12.9%. For the full year, Germany’s exports to the US declined by 9.3%, compared to the previous 12 months, to €146.9 billion ($174.61 billion).
In a paper entitled, ‘One year of Trump 2.0: A bitter reckoning’, Dr. Samina Sultan, Senior Economist for European Economic Policy and Trade, at the German Economic Institute (IW), noted that German exports to the U.S. have declined sharply since President Trump began his second term of office.
“It cannot be explained by tariffs alone. It is also likely a consequence of the dollar’s depreciation, itself driven by declining confidence in US stability,” Sultan said.
German exports of motor vehicles and parts to the US dropped by almost 19% between February and October 2025 compared with a year earlier. Machinery exports declined by 10 % and those of chemical products fell by over 10%.
Automaker Volkswagen (VW) recorded a 13.6% decline in deliveries to the US market last year versus 2024 which it attributed to “a challenging environment characterized by the tariff situation.”
But its luxury brand Porsche did report a new all-time US sales record in 2025.
VW’s German rival, BMW Group, has issued provisional figures which reveal a 5% yoy increase in sales of its BMW and Mini brands in the US last year, despite a decrease of 4.6% in Q4.
Wines and Spirits Hit
Turning to France, the eurozone’s second-biggest economy behind Germany, 2025 annual figures from the Customs authority point to sales of French products across the Atlantic remaining at the same level as 2024.
However, this stability was due solely to the buoyancy of aerospace exports without which French sales to the US would have fallen by 5% y-o-y, with a drop of as much as 13% in the last quarter.
Affected by the rise in customs barriers, sales of base chemicals decreased by 60% compared to the last quarter of 2024. The decline reached 42% for beverages and 25% for perfumes and cosmetics.
2025 sales of French wines and spirits to the US, their biggest export market, fell 21% to €3 billion ($3.565 billion) while volumes were down 9%, according to trade body FEVS and largely attributed to tariffs and the dollar’s depreciation.
French luxury goods giant LVMH appeared to weather the upheaval in trans-Atlantic trade reasonably well last year. The group’s products, including high fashion, watches, perfumes and champagnes, doubtless benefited from inelastic demand, US importers and consumers being largely insensitive to price inflation.
The US accounts for just over a quarter of LVMH’s global sales and while the first half of last year produced a modest decline, Q3 and Q4 reversed the trend.
Tariff Threats and Rates
An indication of just how sensitive freight rates are to tariffs or threats of tariffs, was highlighted by Xeneta, the ocean and air freight rate intelligence platform, in its monthly (air freight) report in January.
“On the Transatlantic westbound corridor, spot rates unexpectedly rose 3% year-on-year in January, despite a 4% decline in chargeable weight. This divergence may partly reflect the recent US tariff threat (triggered in response to opposition to Trump’s plans for Greenland) — an additional 10% on imports from eight European countries from 1 February - before it was reversed on 21 January. This demonstrates both the responsiveness and nervousness of shippers trying to protect their product margins,” it stated.
“The withdrawal of the tariff threat by the US administration certainly appears to have prompted a temporary demand bump: in the week ending 25 January, volumes rose 16% week-on-week, a period that typically sees only low single-digit growth. However, a weaker dollar – making euro-quoted air freight more expensive – may be a larger factor behind the rate strength,” Xeneta added.
As for ocean freight, in its Market Update for January, DHL observed that “transatlantic rates remain pressured by overcapacity and softer US import demand, even as ETS (EU Emissions Trading System)-related costs keep the cost base elevated.”
‘Shift in Trade Patterns’
Rico Luman, Senior Sector Economist, at Dutch bank ING, specializing in transport, logistics and the automotive industry, emphasized that the combination of a weaker dollar against the euro, coupled with the impact of import tariffs, represented “a significant cost burden which U.S. importers and consumers will bear the brunt of eventually. It also affects the competitive position of European exporters.”
He pointed to data showing that total EU exports by value dropped 6% year over year between Trump’s so-called ‘Liberation Day’ in April 2025 and end-November 2025, and that the last months of 2025 had brought more deterioration.
So how are shippers and logistics services providers (LSP) responding to the upheaval in EU-U.S. trade?
“The fact is that with the US tariffs international commerce has become politicized, triggering the start of a shift in trade patterns,” he told AJOT.
“For shippers, it’s a case of finding ways to reduce dependency (on the Europe-US trade lane) by diversifying their supply chains. For LSPs active on the transatlantic it means freight flows to the U.S. have less potential. So, the task facing them is to tap into potentially better business opportunities on other trade lanes. They could also play an important role in helping customers restructure their supply chains.”
‘Impact Varies by Industry’
One major LSP keeping a close eye on the impact of the slide in the dollar and US tariffs is French group Geodis, which has a significant footprint in North America. “Freight volumes from Europe to the US have declined as a result of three converging factors,” commented Henri Le Gouis, EVP, global freight forwarding, in a written response to questions from AJOT.
“First, the dollar’s depreciation against the euro has reduced price competitiveness for European exporters. Second, elevated energy costs continue to weigh on certain European industries, particularly energy-intensive sectors such as chemicals. Third, US tariffs have materially slowed export activity during the third quarter of 2025 with volumes expected to have normalized gradually toward the end of last year.
“That said, the impact varies by industry and is closely tied to pricing power. Air freight, for example, has proven more resilient (than ocean) as it primarily supports high-value goods such as pharmaceuticals, luxury products, and aerospace components – sectors that are better positioned to absorb cost increases.”
He also noted that despite the competitive advantage created by a weaker US dollar, European demand for US exports has remained subdued. Lower volumes have consequently put downward pressure on freight rates.
Market Outlook
Le Gouis underlined that global overcapacity in ocean freight continues to weigh on the market with no expectation of a meaningful rebound in the near term unless there is a significant geopolitical disruption affecting major trade lanes.
Turning to air freight, he said activity was stronger in the early part of 2025 as shippers front-loaded volumes, but year-on-year momentum has slowed in recent months, he said. Some sectors are more affected than others, with niche and time-sensitive flows remaining relatively stable.
“Looking ahead, global trade growth is expected to moderate but also to become more diversified in 2026. In the transatlantic market, our focus will remain on industries with strong pricing power and sustained end-customer demand. In an environment characterized by volatility, agility is critical, adapting quickly will be essential in helping customers manage disruption and protect supply chain continuity.”
