Recent trade data reveals a sharp contraction in the eurozone's trade surplus, highlighting the growing impact of international tariffs and structural competitiveness challenges on European exports.
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According to ING's analysis, eurozone exports fell by 2.4% month-on-month in June, with a modest year-on-year increase of just 0.4%. Meanwhile, imports rose by more than 3% MoM, narrowing the seasonally-adjusted trade surplus from €15.6 billion in May to a mere €2.8 billion in June.
The data underlines a severe decline in exports to major global markets. Exports to the United States dropped by 10% YoY, while exports to China fell by 12% YoY. Efforts to diversify trade towards emerging economies also showed limited success, with shipments to India and Brazil down approximately 5% YoY in June. ING notes that these figures reflect both the immediate effects of tariffs and longer-term challenges to European competitiveness.
Carsten Brzeski, Global Head of Macro at ING, remarked: 'We struggle to see a scenario where exports return as a powerful engine of European growth anytime soon.'
The initial months of 2025 were marked by volatility in European industrial data, largely driven by front-loading of US-bound exports ahead of tariff implementation. By June, exporters were already subject to 10% tariffs, with automotive producers facing 25% and steel and aluminium sectors up to 50%. The next wave of 15% tariffs, agreed in July, took effect on 1 August.
Brzeski emphasised the compounded pressures: 'The strengthening of the euro since the start of the year, US tariffs, as well as broader uncertainty regarding the future of global trade and fierce competition for European exporters in general, are likely to weigh on European exports moving forward.'
The findings signal a sobering outlook for the eurozone's external trade, challenging previous expectations that exports could drive economic growth in the near term. Analysts suggest that without significant structural adjustments or relief from tariffs, European exporters may continue to face headwinds.
This development comes amid ongoing geopolitical tensions, particularly the war in Ukraine, and continued uncertainty around global trade relations. The convergence of these factors underscores the vulnerability of the eurozone's export-dependent sectors to policy shifts and international market dynamics.
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