EU‑US Trade Deal: Key Insights and What We Still Need to Know

EU–US Trade Accord Cuts Tariffs to 15 % for 27‑Country Bloc

Ursula von der Leyen and Donald Trump reached a landmark agreement Sunday that will avert a 30 % levy on European goods and replace it with a 15 % baseline rate. The pact is a lifeline for a $1.9 trillion transatlantic trade relationship that was poised to collapse on August 1.

Key Provisions of the Deal

• 15‑% tariff across most sectors—the same level for goods that Japan secured earlier this month—with bilateral exemptions on select products.
• Relief for the auto industry—roughly 13 million jobs that were threatened by a 25 % tariff on top of a pre‑existing 2.5 % rate. Jacob Funk Kirkegaard (Peterson Institute) noted that the new 15 % rate marks a substantial drop from the 27.5 % Trump tariff.
• 15 % levy will still hold a cost load for German automakers but is considered manageable. Elvire Fabry (Jacques Delors Institute) emphasized this point.
• 15 % rate is higher than the US’s historic average of 4.8 % on European goods but aligns with the existing flat 10 % rate Trump has enforced since April.
• The EU committed to purchasing $750 billion of liquefied natural gas, oil and nuclear fuels from the United States over three years to replace Russian energy supplies.
• Additional investment of $600 billion in the United States is part of the agreement, with Trump affirming that EU member states would acquire “hundreds of billions of dollars” worth of military equipment.

Exemptions and Sector‑Specific Adjustments

• The 15 % rate applies across most sectors, including semiconductors and pharmaceuticals. Ireland’s export sector was a focal point that the bloc seeks to protect.
• Trump launched investigations that could lead to steeper tariffs on these key sectors; he warned of potential 200 % levies on drugs in a recent statement.
• Bilateral tariff exemptions cover aircraft, specific chemicals, semiconductor equipment, certain agricultural products and critical raw materials.
• Steel: The EU currently faces a 50 % tariff on its steel exports to the United States. Von der Leyen confirmed a compromise: “Tariffs will be cut and a quota system will be put in place.” European steel would only encounter 50 % levies after a designated quantity arrived in the United States, though the exact mechanism remains undisclosed.

Next Steps for Approval and Detailing

The agreement must receive approval from all 27 EU member states. Ambassadors will convene Monday morning for a briefing from the European Commission. Technical discussions will continue to flesh out the deal’s specific clauses. Von der Leyen described the accord as a “framework” agreement that will be refined over the coming weeks.

Notably, there is still no definitive resolution on the alcohol sector. France and the Netherlands are pressing for carve‑outs for wine and beer, respectively. Von der Leyen highlighted that these details are pending: “This is something which has to be sorted out in the next days.”