Transatlantic economy: growing connections between Europe, the US and the world

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Three main “actors” in world economy- the US, China and the EU- account for about three-fourths of the global GDP. However, two economies in trans-Atlantic relations, i.e. the US and EU have already become strong drivers in progressive global growth. The transatlantic economic ties provide, e.g. for 16 million jobs on both sides in two sides, half of total global personal consumption, about $7 trillion in total commercial sales a year, and one third of global GDP, in terms of purchasing power.    


According to recent International Monetary Fund’ data, the world economy has had by the end of 2023 a gross domestic product, GDP of about $105 trillion or $5 trillion higher than the year before.

The US continued to be presently the biggest economy with a GDP of about $30 trillion (it is more than the sum of the GDP of 174 countries around the world); the GDP of the EU-27 block is about $24.3 trillion. China, as a single country, stays steady at the second place in the world’s economy with a GDP of about $19.5 trillion.

Top 5 economies in the world are the US, China, Germany, Japan and India; consequently, it means that the US, China and the EU-27 economies account for over three-fourth of the world-wide GDP.

The trans-Atlantic economy has proved to be remarkably robust facing mounting global challenges, economic, strategic and international disruptions. The US and Europe remain each other’s most important markets and geo-strategic and economic partners, acknowledges recent annual economic analysis of transatlantic cooperation.

Suffice to say that the $8.7 trillion transatlantic economy employs more than 16 million workers in mutually “recognized” job markets on both sides of the Atlantic. It is the largest and wealthiest market in the world, accounting for half of total global personal consumption and close to one-third of world GDP.

Recent main developments: 2023-account

It was the record-breaking year on multiple fronts: a) sales by European affiliates of US companies reached a record high of $3.8 trillion; b) sales by the US affiliates of European firms hit a record high of $3.1 trillion; c) the US-Europe trade in goods reached an all-time high of $1.22 trillion in 2023 – double the US-China trade in goods of $575 billion.

The US-EU trade in goods hit presently a record of $946 billion: it was 39 percent higher than the US-China goods trade of $575 billion and 16 percent higher than EU-China goods trade of $798 billion.

The US goods exports to Europe reached a record high of $498 billion: the US company affiliates in Europe earned an estimated $350 billion, the European affiliates in the US earned an estimated $190 billion.

The US became Europe’s most important supplier of liquefied natural gas, LNG; petroleum and oil accounting for 50 percent of EU LNG imports and 18 percent of EU petroleum oil imports. Europe became the top purchaser of US crude oil and the US most important LNG export market, accounting for more than 60 percent of the US LNG exports in 2023.

Besides, 62 percent of global investment into the US comes from Europe (data from 2021-22), and about the same share of the US global investment goes to Europe.

Data from:

By-lateral ties are particularly vital in foreign direct investment, FDI, as well as in portfolio investment, banking claims, trade and affiliate sales in goods and services, digital links, energy, mutual R&D investment, patent cooperation, technology flows, and sales of knowledge-intensive services.

The EU-based foreign firms generated $412 billion in the US exports to the world (2021) and the European firms accounted for 59 percent of the total. Thus, the US-based German companies exported over $59 billion in goods made in the US followed by those from the UK ($52 billion) and the Netherlands ($38 billion). The US foreign affiliate sales in Europe of $3.8 trillion in 2022 were 55 percent more than total US global exports of $2.1 trillion and roughly half of total US foreign affiliate sales globally.

During 2023, the US companies invested over $110 billion in Europe: i.e. more than six times what they invested in the BRICs ($18 billion total in Brazil, Russia, India, and South Africa) and nearly 20 times more than what they invested in China ($5.6 billion). The US companies in the first nine months of 2023 earned an estimated $260 billion from their operations in Europe: i.e. 2.7 times what they earned from operations in all of Asia ($85 billion).

General reference and citations to: Hamilton D. and Quinlan J. The Transatlantic Economy 2024: Annual Survey of Jobs, Trade and Investment between the United States and Europe. Washington, DC: Foreign Policy Institute, Johns Hopkins University SAIS/ Transatlantic Leadership Network, 2024.

Europe in the US

Europe accounted for half of global FDI that flowed into the US; the US FDI inflows from Europe have totaled $170 billion in 2023, down from $219 billion the year before.

Total European investment stock in the US of $3.4 trillion in 2022 was more than three times the level of Asian investment stock in the US. Of the overall European level, EU FDI investment stock in the US was $2.4 trillion in 2022. The UK was the largest European investor in the US in 2022, with total investment stock totaling $663 billion; the Netherlands ranked second in Europe ($617 billion), followed by Germany ($431 billion) and Switzerland ($307 billion).

The UK’s investment stock in the US was 23 times Chinese investment stock in the US of $28.7 billion, and the Germany’s investment stock was 15 times greater.

Europe accounted for 62 percent of the $5.3 trillion of foreign capital invested in the US (in 2022) on a historic cost basis; this year, total assets of European affiliates in the US were about $9.3 trillion. UK firms ranked first, followed by those from Germany, Switzerland, and France. Hence, the European-owned assets in the US rose in 2022 to $9.3 trillion.

European affiliates in the US earned about $190 billion in 2023, a record high: the UK firms accounted for about 25 percent and German companies for 20 percent of total European affiliate output in the US. European companies operating in the US accounted for nearly $1.2 trillion contributed by all foreign firms to the US aggregate production. Chinese affiliate output in the US was just $15 billion in 2021, less than that of Sweden ($21 billion).

Affiliate sales, not trade, are the primary means by which European firms deliver goods and services to the US consumers: in 2022, European affiliate sales in the US ($3.1 trillion) were more than triple the US imports from Europe. Sales by British and German affiliates in the US were the largest ($632 billion each) in 2021, followed by Dutch affiliate sales ($423 billion).

Trade in goods and services

= Trade in goods from the EU to the US in 2023 was $1.22 trillion; it was double the US-China goods trade of $575 billion; in 2022, trade EU-US was $946 billion. It was 39 percent higher than the US-China goods trade and 16 percent higher than EU-China goods trade of $798 billion.

= The US and Europe are the two leading services economies in the world; the US is the largest single country trader in services, while the EU is the largest trader in services among all world regions. The US and the EU are each other’s most important commercial partners and major growth markets when it comes to services trade and investment. Moreover, deep transatlantic connections in services industries, provided by mutual investment flows, are the foundation for the global competitiveness of the US and European services companies.

Five of the top ten export markets for US services are in Europe; the EU accounted for 43 percent of total American services exports and for 42 percent of total US services imports in 2022.

The US services exports to Europe reached a record $402 billion in 2022: the US had a $107 billion trade surplus in services with Europe, compared with its $202 billion trade deficit in goods with Europe.

= The US imports of services from Europe rose to $293 billion in 2022: e.g. the UK, Germany, Switzerland, Ireland and France are top services exporters to the US. The EU-27 services trade with the US of $704 billion in 2022 was 4.6 times larger than EU-China services trade of $154 billion.

Putting goods and services together, the EU-US trade totaled $1.61 trillion in 2022; the EU-China trade of $1.06 trillion was only 66 percent bigger, and US-China trade of $758.42 billion was only 47 percent larger. China-Germany trade in goods and services of $348.45 billion in 2022 was 12 percent less than the US-Germany trade of $394.15 billion.

= Foreign affiliate sales of services, or the delivery of transatlantic services by foreign affiliates, have exploded on both sides of the Atlantic over the past few decades and become far more important than exports. Thus, sales of services by US affiliates in Europe totaled $1.1 trillion in 2021, or 57 percent of the global total, which is about three times more than US services exports to Europe of $402 billion.

Services by US firms based in the UK and UK companies based in the US totaled $489 billion in 2021 – over three times more than the two countries’ overall trade in services. The UK alone accounted for 30 percent of all US affiliate services sales in Europe: more than combined US affiliate services sales in Latin America and the Caribbean, Africa and the Middle East.

= European affiliate sales of services in the US of $753 billion in 2021 were about 70 percent of the US affiliate sales of services in Europe. Nonetheless, European companies are the key providers of affiliate services in the US: i.e. German affiliates led in terms of affiliate sales of services ($196 billion), followed closely by US-based UK firms ($172 billion). German and UK affiliates each supplied more services in the US than did Canadian and Mexican affiliates combined. German affiliate services alone were more than 16 times those provided by Chinese affiliates in the US. European companies operating in the US generated about $775 billion in services sales in 2022, which is roughly 2.6 times more than European services exports to the US of $293 billion.

Transatlantic digital economy

Transatlantic trends in the digital capitalism are enabling about $8.3 trillion in the EU-US economic relationship: the data flow accounts for more than half of Europe’s and about half of the US data flows globally; besides, almost all EU-based firms transfer data to and from the United States.

European and American cities are major hubs of cross-border digital connectivity; still the EU cities are the global leaders, with tremendous connected international capacity: e.g. Frankfurt, London, Amsterdam and Paris substantially outpace North American and Asian cities.

The US presently accounts for over 53 percent of the world’s operational hyper-scale digital infrastructure. The digital concentration is huge: i.e. more than one-third of US hyper-scale capacity is situated in one state – Virginia, which has far more hyper-scale data center capacity than either China or all of Europe.

The transatlantic data seaway is the busiest and most competitive in the world: submarine cables in the Atlantic carry more than twice the traffic of transpacific routes and intra-Asian routes.

The US and Europe are each other’s most important commercial partners when it comes to digitally-enabled services: the US and the EU are also the two largest net exporters of digitally-enabled services to the world. For example, in 2022, the US exported $307 billion in digitally-deliverable services to Europe, i.e. more than double what it exported to the entire Asia-Pacific region ($141 billion), and more than combined US exports of digitally-deliverable services to the Asia-Pacific, Latin America and other Western Hemisphere, Africa, and the Middle East.

Europe accounted for about half of all the US digitally-deliverable exports to the world; however, the US has had a $103 billion trade surplus with the EU in digitally-deliverable services in 2022. The US purchased $208.4 billion, making it the largest recipient of the EU-wide digitally-enabled services exports, which is about the same as the entire region of Asia and Oceania.

Besides, the digitally-enabled services are not just exported directly, they are used in manufacturing and to produce goods and services for export. Over half of digitally-enabled services imported by the US from the EU is used to produce American goods and products for export, and vice versa. In 2021, EU-27 states imported about $1.45 trillion in digitally-enabled services, and about 17 percent ($244.2 billion) came from the US making it the largest single-country supplier of these services. Even more important than both direct and value-added trade in digitally-enabled services, however, is the delivery of digital services by the US and European foreign affiliates. Thus, the US services supplied by affiliates abroad were $1.95 trillion in 2021, roughly 2.4 times global US services exports of $801.14 billion; moreover, half of all services supplied by US affiliates abroad are digitally-enabled.

In 2021, Europe accounted for 67 percent of the $434 billion in total global information services supplied abroad by the US multinational corporations through their foreign affiliates.

The US overseas direct investment in the “information-digital” industry in the UK alone was triple the US information industry investment in the entire Western Hemisphere (outside the US) and 15 times more than such investment in China; and equivalent US investment in Germany was 3.8 times more than in China.

The US is the global leader in international trade in products delivered through data flows, followed by the UK, France, Germany, India, Ireland, the Netherlands, and Switzerland.

Transatlantic innovation economy

Bilateral US-EU flows in research and development sectors, R&D are the most intense between any two international partners; in 2021, US affiliates spent $37.5 billion on R&D in Europe, which over half of total American R&D conducted globally by affiliates.

The R&D expenditures by the US affiliates were the greatest in the UK ($7.7 billion), Germany ($6.7 billion), Switzerland ($6.1 billion), Ireland ($4.8 billion), Belgium ($2.7 billion) and France ($2.2 billion). These six states accounted for roughly 83 percent of the US spending in 2021 on R&D in Europe in one year.

R&D expenditures by majority-owned foreign affiliates in the US totaled $78.3 billion in 2021; European affiliates accounted for 69 percent of that total. Swiss firms were the largest foreign source of R&D in the US in 2021, spending some $13 billion, or 24 percent of the total of European R&D; German firms ranked second with $11.2 billion, or 21 percent of the total.

Note: all references and citations are from the Annual Survey of the Transatlantic Economy (2024) published by the US Foreign Policy Institute, Johns Hopkins University SAIS/ Transatlantic Leadership Network.

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