US economy under pressure: trade deficit and new tariffs in focus!

US economy under pressure: trade deficit and new tariffs in focus!

US President Trump has once again lamented the United States' high trade deficit, which amounted to 1 trillion euros in 2024, with exports at 2 trillion euros and imports at 3 trillion euros. Despite these concerns, there are positive signs for the US economy. Economists had initially expected a negative impact from the new US administration, but no such decline has been seen so far. In the first quarter of 2025, gross domestic product (GDP) fell by around 0.3 percent, while the inflation rate was 2.3 percent in April 2025.

Unemployment in the US remains at low levels and stock prices have performed positively, encouraging many Americans to expand their retirement savings in the stock market. Services also play an important role in the USA's international economic relations: in 2024, the United States exported services worth 1 trillion euros and imported 750 billion euros. Demand for the dollar as the international reserve currency remains high, allowing the United States to borrow relatively cheaply.

America compared to Europe

In a global economic comparison, the US economy stands out in 2024 with growth of 2.8 percent, while the German economy fell by 0.2 percent. American national debt was 124 percent of GDP in 2024, compared to 62 percent in Germany. The latter had a deficit ratio of -2.8 percent of GDP in the same year, while several EU countries, including Romania with -9.3 percent and Poland with -6.6 percent, exceeded the set targets.

The EU sees these deficits as problematic because the Stability and Growth Pact stipulates that public deficits cannot exceed 3 percent of GDP. Excesses could lead to an excessive deficit procedure, which could result in fines. Despite these challenges, some EU countries, such as Denmark and Cyprus, recorded financing surpluses in 2024.

Public debt and stability in the EU

The EU average public debt rose to 81.0 percent of GDP in 2024. In comparison, Germany had a relatively low debt level of 62.5 percent. This situation highlights the different financial health conditions within the Union. The EU Commission plans to activate the escape clause in spring 2025 in order to increase defense spending without initiating the excessive deficit procedures.

It remains to be seen how the economic conditions will develop in both the USA and Europe. The U.S. economy could be impacted by new tariffs, increasing import costs and boosting demand for domestic products. However, the US's high national debt poses the risk that the country could lose its position as a first-class debtor, which would have a negative impact on confidence in the dollar.

For further information on the economic conditions, the reports from tagesschau.de and destatis.de be consulted.