Through the deal, the EU will purchase $750 billion worth of oil, gas, nuclear fuel, and semiconductors from the US
4 hours ago
- The new trade deal reduces US tariffs on vehicles made in Europe to 15 percent.
- Steel tariffs remain at 50 percent with potential quota negotiations pending.
- Trump threatened 30 percent tariffs on EU goods starting August 1 before the deal.
After months of negotiation and uncertainty, the United States and European Union have reached a significant new trade agreement. The deal is poised to reshape not only the automotive industry but also ripple across a wide range of global sectors.
Markets have already responded positively, with share prices climbing internationally. This development follows closely on the heels of a separate U.S. trade agreement with Japan, which focused on tariff adjustments.
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In the lead-up to a recent meeting with European Commission chief Ursula von der Leyen, President Trump had threatened the EU with sweeping 30 percent tariffs. However, the two sides have agreed on a 15 percent rate to be applied to most EU goods. Importantly, this extends to the automotive industry and will lessen the impact of earlier 27.5 percent tariffs applied against them.
Broader Economic Scope
Through the deal, the EU has agreed to buy $750 billion worth of oil, gas, nuclear fuel, and semiconductors from the US over three years. It will also invest $600 billion in the US, which includes the purchase of expensive military equipment. Von der Leyen also explained that there will be zero tariffs on “all aircraft and component parts, certain chemicals, certain generics, semiconductor equipment, certain agricultural products, natural resources, and critical raw materials.”
“I think this is the biggest deal ever made,” Trump added while speaking with reporters.
Some Details Still Need To Be Finalized
However, a 50 percent tariff on steel and aluminum remains in place. It’s possible this could be replaced with a quota system, but this is something that will need to be negotiated at a later date. According to Reuters, the EU has also agreed to lower non-tariff barriers on cars and some agricultural products, but important details are still being discussed between the two parties.
While the 15 percent tariffs are certainly better than the 30 percent tariffs that President Trump had threatened to enforce from August 1 if a deal couldn’t be reached, they are still up significantly from the average 4.8 percent tariff from before Donald Trump returned to the Oval Office.
