The European Commission has secured a deal with the Trump administration to avoid a potential trade war and limit new tariffs on most EU goods entering the US to a baseline rate of 15%.
The Commission negotiates trade policy on behalf of the 27 EU member states and its president, Ursula von der Leyen, was in Scotland yesterday, at the US president’s golf course, to secure the deal.
Halved rate
After Trump threatened to increase rates to as much as 30% if an agreement wasn’t secured, the parties agreed to a 15% rate for most exports including cars, pharmaceuticals and semiconductors.
Politico also reports that “strategic goods like aircraft parts, natural resources and critical raw materials will be exempt”.
A 50% rate remains in place for aluminium and steel, however. Von der Leyen said she hopes the EU and US could work together to reduce this by addressing global overcapacity in these sectors.
Trump also said the European bloc would spend an additional US$750bn on US energy products as a result of the deal, while also investing $600bn in the US and buying a “vast amount” of American military equipment, according to the FT.
Von der Leyen confirmed the EU would seek to buy $250bn of US energy products in each of the next three years.
‘Certainty in uncertain times’
“Today’s deal creates certainty in uncertain times,” said von der Leyen, “for citizens and businesses on both sides of the Atlantic.”
“The two biggest economies should have a good trade flow between us,” she also said.
Trump, who had said he was in a bad mood ahead of the talks, praised the deal for bringing a “lot of unity and friendship”. His threatened 30% rate would have come into force from 1 August had the agreement not been reached.
Mixed response
The deal hasn’t been universally welcomed in Europe however, with the 15% tariff rate still a significant increase on the pre-Trump average of 4.8%.
"This is not an agreement,” the BBC reports Hungarian president Viktor Orban saying.
“Donald Trump ate Von der Leyen for breakfast, this is what happened and we suspected this would happen.”
“It is a dark day when an alliance of free peoples, gathered to affirm their values and defend their interests, resolves to submission,” French prime minister François Bayrou posted on X.
German Chancellor Friedrich Merz praised the deal saying it avoided an “unnecessary escalation in transatlantic trade relations” and reduced tariffs for his country’s significant automotive industry from 27.5% to 15%.
The European stock markets also rose to a four-month high this morning following yesterday’s announcement, the FT reports.
UK comparison
The UK secured a lower 10% tariff rate with the US via the Economic Prosperity Deal that Sir Keir Starmer’s administration negotiated with the White House in May.
“We seem to have gotten worse conditions than the UK,” Brando Benifei, the Italian S&D MEP who chairs the delegation for relations with the US, told Politico.
“That’s not a good starting point and we need to look at the details to understand what we actually get, because it is — to be frank — not clear at all from the declarations we have seen.”
It is also unclear how the disparity in US tariffs faced by British and European exporters could affect Northern Ireland.
Under the terms of the post-Brexit Withdrawal Agreement and the Windsor Framework, Northern Ireland is in the internal UK market for domestic trade but effectively remains in the EU single market for its trade with Europe, avoiding the need for a border on the island of Ireland.
‘Asymmetrical’ deal
Fergus McReynolds, director for Europe and international at the Chartered Institute of Export & International Trade, said of the EU-US deal:
“The devil of this deal will very much be in the detail and what impact this seemingly asymmetrical deal will have on transatlantic trade.
“What the deal has done is bring some calm to a fraught Brussels, which has been consumed over much of the last month by the uncertainty of whether a deal will come or not.
“As officials in Brussels and Washington now focus on putting pen to paper and translating the deal into meaningful terms for businesses, what remains uncertain is how stable the deal will turn out to be.
"Does this mark the end of the uncertainty or will we see more action from either side as the impact of the deal comes to light? Only time will tell.”
