Back to the “chicken War”?

The EU’s food and agriculture exports to the US amount more than 38 billion, while imports are only €14bn. Hence, from a trade perspective, the US appears to be more important for the EU than vice versa. If the US imposes tariffs on food and agriculture products from the EU, US importers would bear the cost. This would make EU products more expensive and put pressure on the competitive position of EU exporters to the US. An assessment of the impact of these potential tariffs by Rabobank shows that agricultural machinery would be most impacted. Medium impact is expected for beverages and fresh produce.

Medium impact for fresh fruit and vegetables

The “Chicken War,” one of the most significant trade conflicts between the US and Europe, dates back to the 1960s. During this period, western European member states of the European Economic Community (the forerunner of today’s European Union) grew increasingly concerned about the rising imports of American poultry, which were pricing western European farmers out of the market. To combat this, among other measures, a tariff was imposed on poultry imports from the US, leading to a 50% decline in European poultry imports. In retaliation, the US imposed tariffs on various products, including light trucks, potato starch, and brandy. This situation illustrates how imposing a trade tariff on a single product can escalate into a comprehensive trade war.

Trade war looming again

President Trump has mentioned tariffs on EU goods entering the US, citing trade deficits and insufficient NATO contributions as reasons. This is in line with Trump’s strategy of using economic statecraft for foreign policy goals rather than solely economic targets. In recent weeks, several waves of US tariffs and other policies have hit foreign shores, including tariffs on imports from China, Mexico and Canada. The tariffs on Mexican and Canadian goods were postponed shortly after their announcement. More recently, at a cabinet meeting on February 26, Trump said he would announce a decision on EU tariffs soon, saying they would be around 25%. The threat of potential tariffs compels EU governments and companies to prepare. In this study, Rabobank explores which food and agricultural products and sectors would likely be most impacted from an EU perspective.

EU-US agricultural trade: facts and figures

The EU is largely self-sufficient in agricultural products, except for soy (used as animal feed) and tropical products like coffee, cocoa, banana and pineapple. To understand the EU’s production and trade volumes for food and agriculture, Rabobank examined self-sufficiency rates published by the European Commission. Although this data does not cover all food and agriculture products, it provides a good indication of the balance between production for the internal EU market and exports of agricultural products (excluding processed foods) produced within the EU (see figure 1). Products that the EU does not produce or hardly produces, such as coffee, cocoa, rubber, cotton, tropical fruit are not included in the figure.

EU with many small surpluses exported

Figure 1 indicates that the EU is self-sufficient in many agricultural products, with relatively small surpluses that are exported. Most products have self-sufficiency rates around 90% to 115%, including barley, pork, wine, cheese and tomato. The EU has significant surpluses in milk powder, processed peaches and nectarines, olive oil, and wheat. However, the EU has strong deficits in the soybean complex. Soybeans are primarily used for animal feed and imported from the US and Brazil.

The EU is a large producer of food and agricultural products, actively operating on the world market by exporting its surpluses. The EU ranks among the world’s largest food and agriculture exporters, alongside the US, Brazil, China, and Canada. However, the bloc is also one of the largest importers of food and agriculture products, sharing this status with China, the US, the UK, and Japan. This positions the EU and the US as top players on the global food and agriculture trade stage. But what is the nature of the trade relationship between the EU and the US?

Large trade surplus with the US

For food and agriculture products, the EU has a high trade surplus with the US .The value of EU food and agriculture exports from the EU to the US significantly exceeds that of its imports. In 2024, the EU exported €38bn worth of food and agriculture products to the US, while importing only €14bn. This resulted in a food and agriculture trade surplus of €24bn for the EU. Over the past decade, the gap between these exports and imports has widened. In 2014, the EU’s trade surplus was just €10 bn. The US market is attractive for EU companies because of its size and ability to pay premium prices. The current high surplus is therefore mainly due to the EU exporting value-added food products. These include essential oils (including concentrates for the food and drink industry), forest products like lumber, and other products such as wine, olive oil, baked goods, cereals, pasta, and dairy. In contrast, the US exports low-value basic agricultural commodities. Trade values from 2021 to 2023 also reflect the effects of high inflation.

EU premium products versus US commodities

To understand the types of products that are traded between the EU and the US, we analyzed data on the value of trade flows of over 50 different product groups from the United States Department of Agriculture (USDA). Figure 2 compiles a list of the top 15 products exported from the EU to the US and a top 15 list of products that the EU imports from the US (see figure 3). The EU primarily exports a diverse array of processed food products to the US, including wine, distilled spirits, dairy products, processed fruits, baked goods, nonalcoholic beverages, seafood and some fresh produce. In contrast, the composition of EU imports from the US is less diverse. Soybeans, tree nuts (almonds, pistachios and walnuts) and some sweet potato together make up over a third of all EU imports from the US. Generally, EU imports from the US consist more of commodities and intermediary products, such as soy, forest products, essential oils, dextrins, peptones, soymeal, and ethanol.

The US is an important export market for the EU

To put EU-US trade flows into perspective, Rabobank analyzed total EU export and import data from Eurostat. The data shows that total EU food and agriculture exports are just over €200bn, while imports stand at €138bn. The US is the EU’s second-largest export partner, accounting for 13% of total exports from the EU, and the fourth-largest import partner, representing 8% of total imports into the EU (see figures 5 and 6). Hence, from an EU perspective, the US is a large trade partner and more important as an export market than as a supplier.

EU more important as supplier to the US

From a US perspective, the EU holds more significance as a supplier than as an export market. US food and agriculture exports total €180bn, while imports amount to €225bn. The EU stands as the fifth-largest export partner for the US, accounting for 7% of total exports, and the third largest import partner, making up 16% of total imports (see figures 7 and 8). Canada and Mexico are more important trade partners for the US, with both import and export values to and from these countries being substantially higher than those with the EU. In terms of exports, China is the most important trade partner for the US, boasting a trade value almost three times that of the EU.

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