The European Commission has expressed confidence that a recent trade agreement between the EU and US will provide stability and predictability for the two parties even as the full details are still to be worked out. In a briefing for journalists on 7 August, a Commission spokesperson said the agreement is the best result possible given the challenging circumstances. This is because it creates a uniform tariff of 15% across multiple product groups, down from an initial 30% demanded by the US. Pharmaceuticals and semiconductors will be covered by the 15% ceiling but the details await a review by the US of legislation known as the Trade Expansion Act of 1962. This authorises the US President to adjust imports of certain goods if they are considered to be a threat to national security. This review is still underway.
The trade agreement was announced on 27 July after negotiations in Scotland, UK, between European Commission President Ursula von der Leyen and President Trump. In parallel, the Commission suspended countermeasures that had been drawn up to protect its trading interests.
Statistics provided by the Commission highlight the importance of the bilateral relationship. In 2024, trade in goods and services between the US and EU was in excess of €1.6 trillion. This consisted of €867 billion of trade in goods and €817 billion in services. In 2022, companies in both jurisdictions invested €5.3 trillion in each other’s markets. “Together we are a market of 800 million people. And we are nearly 44% of global GDP,” President von der Leyen said in a statement. The following are key features of the deal.
- All-inclusive US tariff ceiling of 15% for EU goods. Effective 1 August, the US will apply this tariff on the vast majority of EU exports. This rate is all-inclusive and covers the US most-favoured nation (MFN) tariff that was previously stacked on top of additional tariffs introduced by the US. The ceiling applies to cars and car parts that are currently subject to a tariff rate of up to 25% with an additional MFN tariff of 2.5%.
- Special treatment for strategic products. US tariffs on EU aircraft and aircraft parts, certain chemicals, certain generic drugs or natural resources will return to pre-January levels. The US and EU have agreed to add more products to this list.
- Steel, aluminium and copper. The two sides agreed that there is an overcapacity in these products. Therefore the parties will establish quotas for EU exports at historic levels, cutting the current 50% tariff while jointly ensuring global competition.
- Liberalising trade of mutual interest. This involves better access to the EU market for limited quantities of US fishery products and certain US agriculture exports worth €7.5 billion.
- Reduce non-tariff barriers and cooperate on security. The two sides will mutually recognise conformity assessments in certain industrial sectors and ensure the resilience of supply chains.
- Energy commitments. The EU said that it will procure US liquefied natural gas, oil and nuclear energy products with an expected value of $750 billion over the next three years. This would help replace Russian oil and gas on the EU market. The EU has also said that it will purchase €40 billion worth of AI chips.
Mutual investment. The Commission said that EU companies have expressed an interest in investing at least $600 billion in various sectors of the US economy by 2029.
“With this deal we are creating more predictability for our businesses. In these turbulent times, this is necessary for our companies to be able to plan and invest,” President von der Leyen said.