The European Union's (EU27) revenue from trade with the US amounts to 823 billion euros (as of 2019). It is followed by the United Kingdom with 760 billion euros, Switzerland with 361 billion euros and China with 357 billion euros. These totals reflect the volume of trade by current account and include exports of goods and services as well as investment income earned abroad, so-called primary income. This also includes the profits of subsidiaries abroad. Secondary income is also included, i.e. payments received for no apparent consideration, such as development aid, but this is extremely small. All these items are shown under the collective term "credit" in the current account chart.
In the opposite direction of trade, the USA and the United Kingdom again are the EU27's most important trading partners. For imports of goods and services as well as investment income and secondary income, the USA receives EUR 670 billion and the UK EUR 526 billion. China follows in third place with 421 billion euros ("debit" in the current account chart).
The EU27's goods exports to the USA, which are recorded in the traditional trade balance, account for only around 50 percent of the total volume of trade, and goods imports for only around 35 percent. For China, the figures are 70 and 85 percent, respectively. "Classical trade statistics underplay the importance of the US as a trading partner of the EU and overstate the importance of China," says study author Braml. "The numerous headlines and media reports from the beginning of the year proclaiming China as the new number one trading partner are based on this misconception. While China's importance is increasing, for the foreseeable future, the US will remain the most important trading partner."
"It is striking that no consistent strategy is discernible in the EU's trade policy towards all four top partners. In particular, the rigid and dogmatic negotiating position vis-à-vis the United Kingdom seems disconcerting given its great importance as a trading partner," says Kiel Institute President Felbermayr. "As a matter of urgency, the EU should now seek a free trade agreement with the US. It could generate an increase in real GDP of almost 0.5 percent."
The US is also of paramount importance to Germany as a sales market, with total inflows by current account amounting to 207 billion euros (as of 2019). China and the United Kingdom both follow in second place with 132 billion euros.
In fourth place is Switzerland (98 billion euros), followed – at a great distance – by Russia, Japan, Turkey, Canada, India and Brazil. This means that the sales of German companies in the U.S. are reflected in the current account with a larger sum than those of the latter seven countries combined.
"It is a mistake for the debate on economic policy to focus on classical trade statistics, which only cover trade in goods. At the very least, policymakers and the public must also look at trade in services, or better even at the current account as a whole," Felbermayr says. "For this, however, the EU would need to standardize the statistical coverage of its member countries. Currently, the compilation of the EU current account data is fraught with problems and distortions."