BRUSSELS—The atmosphere has lightened for business leaders across the U.S. and Europe, who are glad to see that the threatened trade war has been successfully avoided, courtesy of a new agreement on tariffs and investment. However, there’s still a lot to untangle about who might gain and who might lose from this deal.
In the market shift on Monday, shares of U.S. energy firms, especially those dealing in liquefied natural gas, saw a smile from investors, with companies like Cheniere Energy and Venture Global making gains. On the flip side, major European car makers, particularly BMW and Mercedes, didn’t fare so well, experiencing declines in their shares.
The agreement was announced over the weekend by President Trump and Ursula von der Leyen, the European Commission President. Most European products will see baseline tariffs settled at 15%. Additionally, the EU pledged to purchase $750 billion worth of U.S. energy goods and pump $600 billion more into U.S. investments over the next three years.
Not everything is nuts and bolts, though; aircraft and their components, some agricultural goods, specific chemicals, and semiconductor equipment may escape the new tariffs for now. Even cars, which will face a 15% smack if sold across the Atlantic, could see this rate come down from previous levels.
Free access to the agreement’s text hasn’t yet been granted, and both sides left some elements hazy after the announcement. European officials mentioned that finer details are still buzzing in negotiations, and they anticipate a collaborative formal statement, though it’s described as non-legally binding.
Despite the fuzziness on certain fronts, chip stocks from both sides rose, with companies like ASML from the Netherlands and U.S.-based Advanced Micro Devices enjoying gains of about 3%. Ursula noted that semiconductor machinery would see “zero-for-zero” tariffs, a term that’s sure to be discussed for a while.
When it comes to pharmaceuticals, however, uncertainty hovers over companies like Bayer and Sanofi, as they may only temporarily face that 15% tariff. Bayer’s stocks dropped a little, while Sanofi managed to nudge up slightly.
Joseph Brusuelas from RSM summarized it best: The devil is always in the details. While many U.S. firms can find a silver lining in this agreement, the impacts on the food, beverage, and pharmaceutical worlds remain up in the air. Some European automotive firms could also reconsider returning machinery closer to home to dodge significant treasury charges on raw materials and parts.
This move doesn’t make autoworkers in states like Alabama and South Carolina too thrilled, said Brusuelas, alluding to the influence on local BMW and Mercedes plants.
European leaders and industry advocates expressed mixed reactions. The recent agreement, while viewed as a band-aid of sorts, gives businesses considerable stability going forward. This avoids full-blown conflict that could have escalated economically while putting the European market in a risky position compared to Japan, which also brokered a new deal with the U.S. recently.
Despite forecasts suggesting a downturn in EU economic expansion, which could slow GDP by about 0.5%, analysts predict it won’t be a cataclysmic blow, especially if other U.S. trading allies receive equal treatment.
Carsten Brzeski, an economist at ING Bank, highlighted that the agreement seems to concede almost as optimally as could be hoped for the EU, preventing an economic conflict that could have spiraled out of control.
The European Round Table for Industry stressed the necessity of spelling out clearer regulations that ensure trade predictability, reiterating that a simpler agreement is desired beyond this initial outline.
Von der Leyen mentioned the importance of adding more products associated with zero-tariff positions, especially in agriculture, semiconductors, and aircraft parts.
Eurochambres made it a point that this deal seems to present the least troublesome path forward. Based on president Vladimir Dlouhý’s comments, tariffs of any magnitude disrupt trade and economic growth. Still, the deal establishes a perspective for progressive planning among European businesses.
There’s still some ambiguity among industries concerning which tariffs they’ll navigate, as Trump alluded to retaining high levies on global steel and aluminum. However, von der Leyen shed light on an evolving quota plan that might ease the costs for particular steel quantities reaching the U.S., while recognizing the challenge of the surplus low-cost steel on global markets.
Following the announcement, Eurofer, representing European steel producers, noted they lacked a clear picture regarding the deal’s effect on their market.
EU steel manufacturers voiced urgency in needing to resolve the prevailing 50% tariffs placed on standard export volumes to the U.S., as communicated by Eurofer’s director general, Axel Eggert.
The Europe-wide organization for wine entrepreneurs hoped for inclusion in future tariff-loss regimes.
Value at a 15% tariff could stimulate notable losses for both U.S. and European businesses linked through the supply chain. Compounded with a fragile U.S. dollar, the potential downside view represents wine exports to the EU destabilizing upwards of 10% short-term, as indicated by industry institutions.
The Distilled Spirits Council of the United States resurged for reciprocity with zero tariffs as essential support for national distillers and the market’s labor force.
European leaders showed personal relief at the agreement’s completion; still, France seemed a bit more skeptical. French Trade Minister Laurent Saint-Martin said some aspects felt beneficial, leaning on final specifics for a most inclusive opinion.
He also turned screws for officials to dive into service areas, reflecting upon places where the U.S. remains more reward-laden.
Germans, along with Chancellor Friedrich Merz, hailed the achievement, casting light on its protective nature for numerous export-driven revenue streams that contribute so richly to their economy. Merz expressed appreciation for European Union solidarity and the cohesive negotiation effort via social media.
For Italian Foreign Affairs Minister Antonio Tajani, the successful negotiations counter a possibly extracting trade dispute, although with an eye on the details ahead.
Countries like South Korea are watching closely. They’re In a ping-pong doom scenario regarding tariffs but believe their path could uphold with advantages, announced investments, and energy imports to rejuvenate local build-up processes.
This breakthrough opens doors to more conversations moving forward with every component getting acknowledgment anew.
As communicated from the American Chamber of Commerce to the EU, both parties are urged to pursue a harmonic approach to coexistence in dealing with global challenges together.
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