EU and US Reach Fragile Tariff Deal as Uncertainty Lingers
So, here's what's happening with the big EU-US trade deal that’s been making headlines lately—especially involving Ursula von der Leyen and President Trump. On Sunday, after months of tense back-and-forth, both sides finally announced a long-anticipated agreement. It sets a 15% flat tariff on the majority of EU exports to the United States. That’s a big drop from the 27.5% tariff that’s been weighing on certain sectors like automotive. In fact, this change is being seen as a win, especially for German carmakers.
Ursula von der Leyen, President of the European Commission, confirmed the deal publicly, saying the 15% rate would apply across most sectors—things like cars, semiconductors, and even pharmaceuticals. The key point here is that the 15% is a ceiling—no additional stacking of duties. So, for businesses trying to plan and invest, this offers at least a little more predictability.
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But—and it’s a big but—there’s still a lot we don’t know. For one, the deal isn’t legally binding yet. A joint statement is expected by August 1st, which is the same deadline Trump had set for slapping a 30% tariff on EU goods. Until then, it's more of a handshake than a solid contract. The EU is waiting on the US to issue an executive order to firm things up, and in the meantime, talks are ongoing to negotiate exemptions to that 15% rate.
Some products are already exempt, like aircraft and their components. Given how integrated aircraft production is between the two sides, this exemption was likely essential. The EU is also pushing for more exemptions, especially for wine and spirits, which have strong advocates on both sides of the Atlantic.
Then there’s the unresolved issue of steel and aluminum. Those still carry a whopping 50% tariff in the US. A quota system is being discussed, but nothing is nailed down yet. EU steel producers are understandably nervous, even though there’s talk of future cooperation on global overcapacity—mostly targeting China.
Energy is another big component. The EU has committed to buying $750 billion worth of US energy—liquefied natural gas, oil, and nuclear—over the next three years. But the catch? The EU itself won’t be buying; it’ll rely on industry players to make those purchases. So while it’s a headline number, it’s not a hard guarantee.
Same goes for investment. EU companies are expected to invest around $600 billion in the US. But again, this is based on intentions, not formal commitments. Unlike the Japan-US trade agreement, which includes direct oversight, this deal relies on informal coordination with business associations.
All in all, von der Leyen called the deal "good and satisfactory," noting that it avoids a full-blown trade war. Still, it’s clear this is only the beginning of a long process. Much of what was announced depends on future legal steps, private sector follow-through, and continued diplomacy. So while a tariff crisis may have been averted—for now—the full picture is still very much in progress.
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