Economic outlook quarterly_graphs_June 2025 – V2_Fig 8 – Domesitc demand line

The EU, with its trade-oriented economy and a persistent trade surplus, is heavily reliant on external demand, particularly from the US. However, rising global protectionism, including potential tariffs imposed by the US, has laid bare this dependency as a vulnerability, as it coincides with the decline in EU industries’ global market share and Asia’s growing influence.
The EU’s reliance on external trade is reflected in a surge of the trade surplus in goods from €34 billion in 2023 to €147 billion in 2024, with the United States as the primary destination for EU exports and China as the leading source of imports. Recent US tariff announcements, as well as the uncertainty regarding their application, revived a debate around the need for stronger domestic demand to drive future industrial growth in a more protectionist global environment.