The EU and the US clinched a long-awaited trade deal on Sunday, averting the imposition of a 30% US blanket tariff next month that threatened to upend the €1.7 trillion transatlantic trade relationship.
The agreement, announced after a face-to-face meeting between Ursula von der Leyen and Donald Trump in Scotland, will see the EU face a “straight-across tariff of 15%” on “automobiles and everything else”, the US president said.
Brussels will also purchase $750 billion worth of US energy and invest $600 billion into America “over and above” what it has already promised, Trump added.
He also noted that the EU will buy a “vast amount of [American] military equipment” and “open up” its markets to allow US exports to enter the continent at a “zero tariff” rate.
Sitting alongside Trump, von der Leyen said the “huge” deal will “bring stability [and] predictability” for companies “on both sides of the Atlantic”.
“It’s 15% tariffs across the board, all inclusive,” said von der Leyen, who as Commission president oversees the bloc’s trade policy. “Indeed, basically, the European market is open.”
The news caps months of increasingly frantic efforts by EU leaders to negotiate down Trump’s sweeping levies, which have transformed global supply chains and exacerbated Europe’s deepening economic malaise.
Trump has previously imposed a 50% tariff on steel and aluminium, a 25% duty on cars and car parts, and a 10% blanket levy on most other EU exports that affect around €370 billion worth of EU goods, or 70% of the bloc’s exports to the US.
The duties come on top of the 4.8% average rate faced by EU exporters prior to Trump’s return to the White House in January.
Earlier this month Trump also threatened to introduce a punishing 30% “reciprocal tariff” on EU exports from 1 August. The self-proclaimed “Tariff Man” has also pledged further ‘sectoral’ duties on a range of products, including pharmaceuticals, semiconductors, and aircraft.
Addressing reporters after the meeting, von der Leyen said the so-called “framework deal” will see pharmaceuticals and semiconductors also face the 15% levy, while EU steel and aluminium exports will face a “quota system” in which a limited quantity of the metals are taxed below 50%.
The EU and the US will also completely forgo duties on each other’s aircraft, semiconductor equipment, critical raw materials, and “certain” chemicals, generics, and agricultural products, she added, noting that Brussels “keep working to add more products to this list”.
Prior to Sunday’s meeting, Trump had explicitly ruled out pharmaceutical products being included in any agreement. “Pharmaceuticals won’t be part of it because we have to have them made in the United States, and we want them made in the United States,” he said.
The US is the EU’s top pharma export destination, with €120 billion worth of pharmaceutical and medicinal goods shipped across the Atlantic last year.
Sunday’s announcement was also warmly welcomed by EU leaders and businesses.
“The agreement has succeeded in averting a trade conflict that would have hit Germany’s export-oriented economy hard,” said German Chancellor Friedrich Merz, adding that this is “especially true” for the country’s flagship auto sector.
Fredrik Persson, president of BusinessEurope, a Brussels-based lobby group, said the deal will prevent “tariff escalation that would be extremely harmful to businesses and consumers on both sides” of the Atlantic.
“We still need to examine the details and hope that a solution is soon found for important sectors that appear to be excluded from the deal,” he added.
Sunday’s news means that Brussels’ €93 billion retaliatory package on US goods will likely be suspended, two EU diplomats said. The list, agreed by EU member states last week, is currently set to come into effect on 7 August.
EU ambassadors will also convene tomorrow morning to discuss the deal, diplomats added. – Euractiv.
