How the USA Drain Wealth from Europe
by Enrico Grazzini
Trump Lies: Europe does not suck resources from America. In fact, it’s the opposite. The data on the balance of payments proves it.
American President Trump claims that Europe is sucking money out of America and that the economic relations between the United States and Europe are heavily imbalanced to the disadvantage of the USA, but this is false. The trade balance between Europe and the USA is deficit for America, but the current accounts — which include the trade balance (goods and services exchanges), income balance (from capital and labor), and unilateral transfers — are balanced, and financially, the USA is drawing capital from Europe. It’s important to emphasize that when discussing international fund flows, what truly matters is not the trade balance of goods and services but the overall current account balance, which is balanced.
The USA has a large trade deficit with China, around $295 billion (2024 data). The trade deficit (goods and services) with Europe is much smaller, at €57 billion. According to the ECB, in 2024, eurozone countries recorded a surplus of €213 billion in goods trade with the United States. At the same time, eurozone countries have a deficit in services trade (digital services, entertainment, financial and consulting services, etc.), almost as large: in this case, the USA is in a surplus of €156 billion, again in 2024. The USA also registers a significant surplus of €52 billion in income transfers, thanks to interests and dividends collected on their investments in Europe.
In the end, by considering all exchange items, it appears that in 2024, the current account surplus of the euro area vis-à-vis the USA is only €3 billion, after having been a deficit of €30 billion in 2023 (0.2% of the European GDP): in 2023, the USA was in a strong surplus. Overall, trade and exchange flows between Europe and the USA are balanced and cannot raise any concern for Americans, despite Trump’s false complaints. The problem is that these exchanges are soon expected to become imbalanced, to Europe’s detriment.
Indeed, Europe’s surplus on goods is growing, but slowly: it increased by 68% compared to the €127 billion surplus of 2015. Meanwhile, America’s surplus on services is increasing very rapidly: the US surplus of €156 billion in 2024 has increased nearly 7.5 times compared to €21 billion in 2015. The ECB emphasizes that since 2019, except for 2024, the EU’s current accounts have been deficitary toward the USA “as a consequence of the activities of US multinationals in the euro area.” That is, companies like Amazon, Apple, Microsoft, Netflix, Google, and banks and financial firms like JP Morgan and BlackRock have generated a growing American surplus thanks to the outflow of their profits to the USA.
From these data, it appears that, in the future, unless significant changes occur, the balance between Europe and the USA — both in trade and current accounts — will soon become deficit for the old continent. Therefore, the USA will extract even more resources from Europe.
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