Updated February 18, 2020
U.S.-EU Trade and Investment Ties: Magnitude and Scope
Introduction
U.S.-EU Trade
The United States and European Union (EU) have extensive
Despite the rise of China and other emerging economies,
and globally significant trade and investment ties that have
ongoing U.S.-EU trade frictions, and Brexit, the United
evolved since World War II. These ties have deepened with
States and EU will remain each other’s largest trading
the growth of global supply chains, trade in services, and
partners (see Figure 2A). In 2018, the EU28 accounted for
cross-border investment. The transatlantic economy is a
22.4% (or $1.3 trillion) of U.S. total trade—double the
dominant force; in 2018, the United States and the EU28
2003 value of U.S.-EU trade (see Figure 2B). Given U.S.-
accounted for nearly half of world gross domestic product
UK bilateral trade ties, U.S.-EU trade levels will change
(GDP) (current U.S. dollars), 11% of world population,
with the removal of the UK (see Figure 2C).
one-fifth of world goods exports (excluding intra-EU), and
more than half of global foreign direct investment (FDI).
Figure 2. U.S. Trade with Select Partners
The withdrawal of the United Kingdom (UK) from the EU
on January 31, 2020 (“Brexit”) brings changes to U.S.-EU
trade and investment ties, but the United States and EU will
remain each other’s largest trade and investment partners.
EU Economy
In 2018, the EU28 comprised 21.8% (or $18.8 trillion) of
the global economy. Germany was the EU’s largest
economy (see Figure 1). Excluding the UK, the EU27
comprised 18.5% (or $15.9 trillion) of the global economy.
Figure 1. EU28 Gross Domestic Product (GDP), 2018

Source: CRS, based on data from the World Bank.
Post-Brexit, the EU consists of 27 member states (EU27)
that are integrated economically. Members share a customs
union, a single market in which goods, services, people, and
capital move freely, and a common external trade policy
(negotiated by the EU) with a common external tariff. The
EU has a common currency used by 19 “Eurozone”
member states. It is pursuing further integration in financial
and other areas, but faces challenges.
The 2008-2009 global recession and subsequent Eurozone
debt crisis depressed European economies, led to a rise in
unemployment in many member states, and elicited
concerns about the vitality of the European banking system.
While the EU overall has mostly recovered from this crisis,
Greece, Italy, and other member states continue to face
economic difficulties. The EU economy grew 1.5% in

Source: CRS, data from U.S. Bureau of Economic Analysis (BEA).
2019, and is expected to grow a modest 1.6% in 2020 as
weakness continues in trade and manufacturing
Goods. In 2018, for goods, the EU28 was the United
(International Monetary Fund, November 2019).
States’ largest export market ($320.2 billion), and its
second largest source of imports ($489.8 billion) after
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U.S.-EU Trade and Investment Ties: Magnitude and Scope
China ($540.4 billion) (BEA data). Excluding the UK, the
to reach customers through local presence. FDI occurs in
EU drops in position to be the United States’ third-largest
manufacturing, banking, financial, and other sectors.
goods export market ($253 billion) after Canada ($300.5
billion) and Mexico ($266.0 billion), but it remains the
Figure 3. U.S. Foreign Direct Investment (FDI), 2018
second largest source of U.S. imports ($428.4 billion) after
FDI in the U.S.
U.S. Dir. Invest. Abroad
China. In addition, the composition and rank of goods
traded between the United States and EU changes to some
$4,345
World
$5,951
degree with the exclusion of the UK (see Table 1).
$2,596
EU28
Table 1. U.S. Trade in Goods with Europe, 2018 ($bn)
$3,270
$561
UK

Product (NAICS 4-digit)
EU28 EU27
$758
$2,035
EU27
Top
Aerospace products & parts
47.0
35.0
$2,512
U.S.$ in bn

U.S.
Pharmaceuticals & medicines
32.9
28.8
Source: CRS, data from U.S. Bureau of Economic Analysis (BEA).
exports
Notes: Historical-cost basis.
Oil & gas
14.5
10.3
Navigational/measuring/medical
13.4
11.7
In 2018, the largest destinations in the EU28 for U.S. direct
control instruments
investment were: the Netherlands ($883.2 billion), the UK
Basic chemicals
13.4
12.1
($757.8 billion), Luxembourg ($713.8 billion), and Ireland
($442.2 billion). The largest sources of FDI to the United
Medical equipment & supplies
13.2
12.2
States from the EU28 were: the UK ($560.9 billion), the
Top
Pharmaceuticals & medicines
86.5
79.5
Netherlands ($479.0 billion), Luxembourg ($356.0 billion),
U.S.
Motor vehicles
43.6
34.1
and Germany ($324.2 billion).
imports
Aerospace products & parts
27.7
23.4
In 2017, affiliates of U.S. majority-owned MNEs in the
EU28 had sales of $2.4 trillion and employed 4.4 million
Other general purpose
19.9
17.8
workers in the EU; and affiliates of EU28 majority-owned
machinery
MNEs in the United States had sales of $2.1 trillion and
Navigational/measuring/medical
employed 4.1 million workers in the United States. U.S.-
18.4
16.2
control instruments
UK affiliate activity accounted for one-third of U.S.-EU
Source: CRS, data from U.S. International Trade Commission.
total affiliate sales and jobs.
Notes: NAICS: North American Industry Classification System
FDI is a driver of goods and services trade. In 2018,
(NAICS). Special categories (9300, 9800, 9900) excluded.
related-party trade accounted for 37% of U.S. goods exports
to the EU28 and 63% of U.S. goods imports from the EU28
As highly advanced economies, the United States and EU
(Census Bureau data). In addition, about half of services
trade in similar goods within the same industry (known as
supplied by U.S. MNEs were to foreign persons in the
intra-industry trade). This often consists of trade in
EU28, and about half of sales of services to U.S. persons by
components or intermediate goods used to produce complex
U.S. affiliates of foreign-owned MNEs were by EU-based
products such as cars and machinery, allowing firms to
MNEs in 2017 (BEA data).
specialize and benefit from economies of scale by focusing
on different parts of the supply chains. In many cases,
Issues for Congress
intermediate goods are traded across the Atlantic between
U.S.-EU trade and investment ties present a number of
multinational enterprises (MNEs) and their affiliates (e.g.,
issues for Congress, including:
BMW in Germany trading with BMW in South Carolina).
 the role of these ties in bolstering or adversely affecting
Services. The United States and EU have the world’s two
the U.S. economy and U.S. prosperity overall, and for
largest and highly integrated services economies. In 2018,
constituent interests specifically;
U.S. services exports to the EU28 totaled $253.6 billion and
U.S. services imports from the EU28 totaled $198.6 billion
 the evolution of these ties post-Brexit; and
(BEA data). Business services, travel (business and
personal), charges for use of intellectual property, transport
 the implications of potential U.S.-EU or U.S.-UK trade
services, and financial services were the top traded services.
liberalization agreements, or further escalation of tariff
The UK accounted for the largest share of U.S.-EU services
frictions, for transatlantic trade and investment ties, and
trade: 29.2% (or $74.1 billion) of U.S. services exports, and
in turn, U.S. commercial and economic interests.
30.6% (or $60.7 billion) of U.S. services imports in 2018.
Ireland and Germany were also top services trade partners.
For more information, see CRS In Focus IF10931, U.S.-EU
Trade and Economic Issues, by Shayerah Ilias Akhtar; and
U.S.-EU Foreign Direct Investment (FDI) CRS Report R45745, Transatlantic Relations: U.S.
Transatlantic FDI ties are significant in light of their size
Interests and Key Issues, coordinated by Kristin Archick.
and interdependent nature. While the UK held a significant
share of these FDI ties, the United States and EU27 will
Shayerah Ilias Akhtar, Specialist in International Trade
remain each other’s largest FDI sources and destinations
and Finance
(see Figure 5). The magnitude of FDI reflects their overall
investment-friendly business climates and firms’ preference
IF10930
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U.S.-EU Trade and Investment Ties: Magnitude and Scope


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