The U.S. and EU have the largest bilateral trade and investment relationship in the world, worth over a trillion dollars annually. While the U.S. and EU continue to have a strong partnership in certain areas of mutual interest, the transatlantic trade relationship has faced many challenges in recent years, from the collapse of the Transatlantic Trade and Investment Partnership to several tariff disputes over civil aircraft, steel and aluminum.

Recently, the Biden Administration’s Inflation Reduction Act (IRA), which became law in August 2022, caused a rift between the transatlantic partners due to the EU’s concerns over the bill’s electric vehicle tax credit for North American vehicles, excluding European auto makers. Since the IRA was passed, the EU reacted by adopting its own state aid rules and proposals in the Green Deal Industrial Plan, though the IRA continues to be a source of friction. Will the IRA and recent developments in the transatlantic trade relationship lead to a decrease in trade levels between the U.S. and EU in 2023?

This question will be resolved by comparing the United States Census Bureau’s U.S.-EU total trade in goods (imports + exports) data for 2022 and 2023.

US Census Bureau: Trade in goods with European Union