U.S.-Europe Trade Booms as Old Allies Draw Closer

The U.S. has imported more goods from Europe than from China this year, a big shift from the 2010s when China emerged as America’s dominant trade partner. From Swiss watches to German machinery and Italian luxury items, money and products are flooding across the Atlantic as never before. This is helping Europe’s embattled manufacturers, which are wrestling with skyrocketing energy prices. And it is pushing East Coast ports ahead of their West Coast counterparts in container volumes after years of a U.S. pivot to Asia.

Germany’s exports to the U.S. surged by almost 50% year-over-year in September alone. The weak euro is giving European firms an extra edge in the vast U.S. market. European companies are also pouring resources into North America, including Mexico, lured in part by access to cheap energy.

The U.S., meanwhile, is turning into one of Europe’s biggest energy and military suppliers, replacing Russia as a natural-gas purveyor and helping Europeans to beef up their defenses. Germany plans to buy 35 U.S. F-35 jet fighters, built by

Lockheed Martin Corp.

U.S. services exports to the European Union are surging, up 17% in 2021 year-over-year to 305 billion euros, equivalent to $315 billion, according to EU data.

The burgeoning trans-Atlantic relationship is part of a reorganization of the global economy along East-West lines. Russia’s cutoff of European energy supplies and fears of over reliance on China have changed how companies trade. On both sides of the Atlantic, governments have encouraged firms to produce critical products locally instead of in Asia. Some German companies have started exporting to the U.S. out of plants in Germany instead of China, partly to avoid tariffs, trade groups say.

At the same time, small and midsize German companies, in particular, have been diversifying investments away from China, where they face increasing domestic competition, rising labor costs and onerous Covid-19 regulations, according to a recent study by Rhodium Group, a consulting firm.

“We like the U.S. even more in the current geopolitical context,” said

Ilham Kadri,

chief executive of

Solvay SA,

a Belgium-based chemical company with about €11 billion of annual sales. It recently unveiled a $850 million investment to build…