US and EU seal trade deal with new tariffs and energy contracts
Photo: Ursula von der Leyen and Donald Trump (Getty Images)
The US and the European Union have finalized a trade agreement reached a month ago. It includes a 15% US tariff on most European goods, including cars, medicines, semiconductors, and wood, according to the European Commission.
The parties recorded the agreement in a joint statement. The EU has committed to abolishing tariffs on all industrial goods from the US and providing priority access to the market for American agricultural products and seafood.
Washington has stated that it is ready to reduce the current 27.5% tariffs on cars and auto parts. This will happen after Brussels introduces a bill to reduce tariffs on American goods.
Announcement of agreement and context of negotiations
US President Donald Trump and European Commission President Ursula von der Leyen announced the agreement on July 27 at Trump's golf resort in Scotland. It was the result of months of negotiations and an hour-long face-to-face meeting between the leaders.
This week, they met again as part of negotiations to end Russia's war against Ukraine. The leaders called the trade agreement a historic achievement.
A joint statement notes that the agreement could be expanded to cover new areas and improve market access.
Prospects for automotive industry and investment
According to Reuters, a US administration official said European automakers could see relief in the coming weeks.
"As soon as they're able to introduce that legislation -- and I don't mean pass it and fully implement it, but really introduce it -- then we will be in a position to provide that relief. And I will say that both sides are very interested in moving quickly," he said.
The agreement stipulates that the abolition of US tariffs on cars and auto parts will take effect on the first day of the month when the EU introduces the bill. This opens up the prospect of retroactive concessions for car manufacturers.
Energy and strategic industries
The US agreed to apply most-favored-nation treatment to aircraft and aircraft parts, generics, chemical components, and a range of natural resources, including cork, starting September 1.
The EU has confirmed its intention to purchase US LNG, oil, and nuclear products worth $750 billion, as well as artificial intelligence chips worth $40 billion.
In addition, European companies plan to invest another $600 billion in strategic US industries by 2028.
Digital trade and metallurgy
The parties have committed to removing unjustified barriers to digital trade. The EU has abandoned the idea of introducing network usage fees.
There are also plans to develop rules of origin for goods so that both sides benefit from the agreement.
Cooperation to protect the steel and aluminum markets from overproduction and create sustainable supply chains is being discussed separately.
