• U.S. Trade Representative Jamieson Greer projects the U.S. trade deficit with the EU may exceed that with China in 2025, driven by non-reciprocal EU practices like shellfish import bans from 48 U.S. states while exporting freely to the U.S.
  • The China trade deficit has already declined about 25% year-on-year since August 2025, attributed to Trump administration tariff strategies imposing 10-15%+ rates based on surplus size.
  • Broader efforts include a Section 301 probe into China's Phase One Agreement failures, with a hearing set for December 16, 2025, and global goods deficit trends showing improvement, prompting U.S. investments like auto plants shifting from Mexico to Indiana.

In congressional testimony, Jamieson Greer highlighted that EU trade imbalances, exemplified by shellfish restrictions, are fueling deficits, according to people familiar with the matter. This warning comes as the U.S. goods trade deficit, which hit $1.2 trillion under the prior administration, is declining with China but remains persistent with partners like the EU and NAFTA/USMCA countries, which saw a $125 billion deficit in 2019.

Recent USTR actions have focused on addressing these gaps, with tariffs aiming to boost manufacturing—its share is rising—and wages, which are up inflation-adjusted, amid 3.8% growth in Q2 2025. Greer defended the tariff regime as reciprocal and bipartisan, targeting "unfair practices" such as EU subsidies and China's overcapacity. Efforts to restructure trade relationships have hit a snag with EU digital regulations, like fines on U.S. platforms under the Digital Services Act, adding friction despite no-discrimination pledges.

Without a deal, the U.S. could face widening deficits, but policy shifts are driving production homeward, correlating with job gains such as suspended Tennessee layoffs and Indiana hiring expansions. Stakeholders, including the steel industry, have decried China's WTO-defying mercantilism, harming U.S. states and districts. Greer noted that front-loading increased global deficits temporarily, but the strategy is to rebalance trade through deals for U.S. market access and tech in exchange for investments and procurement.

Looking ahead, more tariffs are likely, with potential congressional legislation for baselines and USMCA tweaks as its review looms in 2026. Experts caution that China's export resilience, with a $1 trillion+ surplus in 2025 via diversification, may sustain gaps unless addressed multilaterally. Attempts to reach EU officials for comment on the shellfish ban were unsuccessful, but sources indicate ongoing negotiations to resolve the imbalance.

Correction: An earlier version misstated the year of the USMCA deficit; it was $125 billion in 2019, not 2024.