US President Donald Trump and President of the European Commission Ursula von der Leyen introduced a wide trade agreement that set 15% of tariffs on most European imports. This avert Trump’s earlier warnings of 30% of the rate if the agreement is not closed within 1 August.
These tariffs, import taxes applied to European goods purchased by Americans, could increase prices for US consumers and reduce profits for European companies and their American partners.
Here are a few things you should know about the business agreement between the United States and the European Union:
What is in agreement?
The announcement of Trump and von der Leyen, made during Trump’s visit to one of his golf courses in Scotland, leaves many details to be filled. The main character is 15% of the customs point of view of the “vast majority of European goods brought to the US, including cars, computer chips and pharmaceutical. It is less than 20% Trump originally designed and lower than its threat of 50% and then 30%.
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Von der Leyen said both parties agreed on zero tariffs on both sides for a number of “strategic” parts and aircraft, certain chemicals, semiconductor facilities, some agricultural products and some natural resources and critical raw materials. The specifics were missing.
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She said both sides “continuing” to add additional products to the list.
In addition, the EU party would buy what Trump said was $ 750 billion worth of natural gas, oil and nuclear fuel to replace Russian energy supplies, and Europeans would invest another $ 600 billion in the US.
What is not in agreement?
Trump said 50% of the American tariff on imported steel would remain; Von der Leyen said that both parties agreed to other negotiations on the fight against global steel gluten, reducing customs and import quotas, ie the amounts that can be imported, often at a lower rate.
Trump said the drugs were not included in the agreement. Von der Leyen said that the problem with pharmacies was “on a separate sheet of paper” since Sunday’s agreement.
From where it would come from $ 600 billion for further investments was not determined. And von der Leyen said that when the agricultural products occurred, the EU party explained that “there are tariffs that cannot be reduced” without determining which products.
What is the impact?
The 15% rate removes Trump’s threat of 30% of the tariff. It is still much higher than the average tariff before Trump got into office, approximately 1% and higher than Trump’s at least 10% of the basic tariff.
Higher tariffs or import taxes on European goods mean that US retailers would have to either increase consumer prices, which should risk loss of market share or swallow added costs in terms of lower profits. Higher tariffs are expected to harm export income for European companies and slow down the economy.
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10% of the baseline used, while the agreement was agreed to be sufficiently high for the European Union Executive Commission to reduce growth prognosis for this year from 1.3% to 0.9%.
Von der Leyen said the 15% rate was “the best we could do” and attributed an agreement to maintain access to the US market and providing “stability and predictability to companies on both sides”.
What are some reactions to the agreement?
The German Chancellor Friedrich Merz welcomed an agreement that avoided “unnecessary escalation in transatlantic business relationships” and stated that “we were able to maintain our main interests” while adding that “I would very much like another relief in the transatlantic trade”.
The Federation of the German Industry was tired. “Even 15% of the customs point of view will have immense negative impacts on the German export industry,” said Wolfgang Niedermark, member of the Federation management.
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While the rate is lower than endangered, “the great reservation of today’s agreement is that there is nothing on paper,” said Carsten Brseski, global chief of Makra in ING Bank.
“With regard to this renunciation, responsibility and nominal value would clearly end the uncertainty of recent months. For the global economy, escalation of tension in US-EU would be serious,” Brzeski said.
“It seems to have avoided this risk.”
What about automobile companies?
When asked whether European car manufacturers could still compete under a new 15% tariff, von der Leyen noted that the rate was significantly lower than the previous 27.5%, which included 25% Trump tariff on foreign cars, along with the current 2.5% of US imports.
The effect on some companies is expected to be considerable. For example, Volkswagen showed a profit of $ 1.5 billion in the first half of the year due to higher tariffs.
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Mercedes-Benz sellers in the US said they were holding the line in 2025 “until the next announcement”. The German car manufacturer has a partial tariff shield because 35% of Mercedes-Benz sells in the US in Tuscaloose, Alabama, but the company said it expects to expect prices to undergo a “significant increase”.
What were the problems that both sides divided?
Before Trump returned to office, the US and the EU maintained relatively low tariff rates within the world’s largest bilateral trade relationship in the world totaling around $ 2 trillion a year. The combined US and the EU represent 44% of the global economy. According to Brussels Bruegel Think based in Brussels, the average US tariff on European goods was 1.47%, while the average EU tariff on US products was 1.35%.
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Trump complained about the surplus of EU trade aged 198 billion-euro in goods that show that Americans buy more from European businesses than the other way around, and said that the European market is not sufficiently open to US cars.
Von der Leyen said the 15% rate was “the best we could do” and attributed an agreement to maintain access to the US market.
Even 15% of the tariff rate will have immense negative impacts on the German export industry.
However, American companies fill part of the business gap by outmilling the EU in terms of services such as cloud computing, travel reservations and legal and financial services. According to the European Central Bank, about 30% of European imports come from US companies.
(Tagstotranslate) 15% of tariffs
