The US and European Union have agreed on a trade deal framework to prevent tariff war. The EU will face 15% tariffs on most of its exports, including automobiles. The deal will not include pharmaceuticals, steel, and aluminium.
“The EU has agreed to purchase $750 billion in energy, invest $600 billion in the US on top of the existing investments, open up its markets to trade with the US at zero tariffs and purchase vast amounts of military equipment,” Trump said. Von der Leyen hailed it as a “huge deal” after “tough negotiations,” saying it would bring stability for both allies, who together account for almost a third of global trade.
The investment over next three years in American LNG, oil and nuclear fuels would help reduce European reliance on Russian power sources, said Von der Leyen. Some goods will not attract any tariffs, including aircraft and plane parts, certain chemicals, and agricultural products. A separate deal on semiconductors may be announced soon. A 50% US tariff on steel and aluminium globally would stay in place.
The deal averts a trade war and comes less than a week before a Friday deadline for higher US tariffs to take effect. Trump announced the deal after a meeting with European Commission President Ursula von der Leyen in Scotland.
For the EU, 15% tariff is the same as that for Japan, not as good as the UK’s 10% tariff rate, but better than the 19% imposed on The Philippines and Indonesia and 20% on Thailand.
Trade in goods between the EU and the US in 2024 was about $976 billion – the US imported $606 billion goods from the EU and exported around $370bn. European leaders cautiously welcomed the deal, says BBC.