In spring 2025, the new US administration significantly raised customs duties on goods imported into the United States. While the average effective rate stood at 2% at the start of 2025, it rose from April onwards, reaching 11% in October 2025 and settling at 8% by March 2026. A year after the increase in customs duties, the US trade deficit in goods and services narrowed, returning to its pre-Covid level by the end of 2025, driven by a sharp decline in imports since the spring, coupled with resilient exports. This improvement compared with the situation in the late 2010s is primarily due to the upturn in trade in goods, while the services trade balance has actually deteriorated compared with the 2010s.

Two thirds of the improvement in the US goods trade balance came at the expense of Europe, particularly Germany and Italy, while the impact on France was more limited. In Germany, exports of automobiles and capital goods to the United States fell. In Italy, the trade balance in pharmaceutical products with the United States deteriorated significantly due to a surge in imports, although these are largely re-exported to the rest of Europe. Finally, in France, the upturn in aeronautical and pharmaceutical exports offset the sharp downturn in cosmetics and beverages.

Furthermore, the United States’ terms of trade, comparing the price of exports to the price of imports excluding taxes, improved significantly in 2025. While this improvement stems primarily from the surge in gold prices (of which the United States is a producer), it is also noticeable for certain specific goods (such as beverages and automobiles) affected by the rise in customs duties. However, the euro area’s terms of trade did not deteriorate in 2025 (even excluding energy), suggesting that these sector-specific falls in tax-exclusive prices had a limited macroeconomic impact...