U.S.-EU Tariff Deal: Gains, Losses, and a Trade War Averted

In a move that helped avert a potentially damaging transatlantic trade conflict, the United States and the European Union reached a preliminary trade agreement on Sunday, slashing proposed tariffs on most EU imports to 15%—half the initially threatened rate.

U.S. President Donald Trump and European Commission President Ursula von der Leyen announced the breakthrough during a high-profile meeting in Scotland. The agreement followed an hour-long negotiation that broke months of stalemate.

The deal mirrors elements of a similar preliminary pact between the U.S. and Japan. However, it leaves several contentious issues unresolved—including tariffs on alcoholic beverages, a politically sensitive matter on both sides of the Atlantic.

Winners and Losers Emerge

Trump hailed the agreement as a strategic win, highlighting European commitments to purchase 750 billion euros worth of American energy products over the coming years and “hundreds of billions” in U.S. defense equipment. If fully implemented, the deal could benefit major European corporations such as Airbus, Mercedes-Benz, and pharmaceutical giant Novo Nordisk.

German Chancellor Friedrich Merz welcomed the news, emphasizing that the accord helped sidestep a trade war that would have severely impacted Germany’s export-driven economy—particularly its key automotive sector. German automakers like Volkswagen, BMW, and Mercedes were hit hard by the U.S.’s previous 27.5% tariff on imported vehicles and parts.

While the new 15% tariff remains higher than the EU’s initial hopes for zero duties, it’s seen as a relief compared to the alternative.

Still, criticism wasn’t absent. Bernd Lange, a Social Democrat and chair of the European Parliament’s trade committee, argued that the tariff structure remains imbalanced and warned that major European investments in the U.S. could come at a cost for the bloc itself.

An unnamed senior U.S. official said President Trump retains the option to raise tariffs if European nations fail to fulfill their investment promises. Meanwhile, the euro rose 0.2% against the dollar, pound, and yen within an hour of the agreement’s announcement—reflecting cautious optimism in the markets.

Steel, Aluminum, and Exemptions

Despite the progress, significant friction points remain. The U.S. will maintain its 50% tariffs on European steel and aluminum. Von der Leyen proposed replacing these tariffs with a quota-based system, while U.S. officials confirmed that talks on this issue would continue.

Von der Leyen announced that both sides had agreed to exempt certain goods from tariffs entirely—among them aircraft and aircraft parts, some chemicals, select generic medicines, semiconductor equipment, specific agricultural products, natural resources, and critical raw materials. “We’ll continue to expand this list,” she added, though she confirmed that alcohol tariffs remain under negotiation.

Political Victory for Trump

The deal is being touted as a win for President Trump. It follows other preliminary agreements with the United Kingdom, Japan, Indonesia, and Vietnam.

According to U.S. officials, the EU has also agreed to reduce non-tariff barriers on cars and certain agricultural products. However, European counterparts noted that technical standards remain a sticking point still under negotiation.

“This is a 20 trillion dollars economy—we’re talking about an opportunity five times the size of Japan,” a senior U.S. official emphasized in a briefing. “Opening their market is a massive opportunity for our farmers, fishers, ranchers, manufacturers—for all of American business.”

Source: tovima.com