On Sunday, President Donald Trump announced an important trade agreement with the European Union. This deal will cut tariffs down to 15%, a welcome change after months of uncertainty that have surrounded trade with the US’s major trade partner.
The new tariff rate of 15% is a notable drop from the 30% Trump previously threatened back on July 12, as well as the 20% he aimed to impose on April 2.
While presenting the deal, Trump confirmed that the European Union has decided not to set any tariffs on American imports. He characterized the agreement as “satisfactory to both sides.”
Ursula von der Leyen, the President of the European Commission, joined Trump during the announcement and stated that the agreement would deliver stability and predictability, which she emphasized is crucial for businesses across the Atlantic.
This agreement is reminiscent of a recent trade pact with Japan announced Tuesday, establishing a 15% import duty on Japanese goods, reflecting Trump’s earlier threats to raise tariffs.
However, it’s notable that just last year, the average US tariff on imports from the EU was merely 1.2%, according to Chief Europe Economist at Capital Economics.
The European Union has been deep in negotiations with U.S. officials, including Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer, working diligently towards a deal. Just before this announcement, Trump had caused concern when he threatened to hike tariffs to 30% through a letter posted on Truth Social.
Von der Leyen, reacting to Trump’s previous letter on tariffs, warned that imposing 30% tariffs on EU exports could disrupt essential transatlantic supply chains, negatively impacting businesses and consumers on both sides.
Following Trump’s letter, the EU committed to pushing for an agreement by the new deadline of August 1, while also preparing a list of U.S. products for possible retaliatory tariffs if negotiations failed. Many products listed included Boeing aircraft, American cars, and goods from key states like Kentucky bourbon and Louisiana soybeans. At that time, the EU was prepared to implement around $100 billion worth of retaliatory tariffs.
Agricultural and business representatives raised alarms, noting that a 30% tariff could drastically influence prices and availability of goods like wines, cheeses, and pasta, dubbing the proposed levy as “incomprehensible.”
Additionally, EU-made cars might see a rise in prices. The German auto trade group VDA highlighted that the costs incurred have already soared to billions and are still climbing daily, according to a statement given to NBC News.
The 27 EU nations represent the U.S.’s largest trading partner, with $605 billion worth of imports into the U.S., surpassing trade volumes from Mexico, Canada, and even China. The primary category of imports in 2024 has been drugs and pharmaceuticals from Ireland, along with autos, aircraft, and heavy machinery from France and Germany.
Separately, Trump has indicated he might impose a staggering 200% tariff on drugs coming into the U.S. However, it seems this would wait at least 18 months before going into effect, and it’s unclear if the new deal with the EU will influence that decision.
This article was originally posted on NBCNews.com.
