President Donald Trump announced on Sunday a trade agreement with the European Union, which would set prices at 15%, ending the months of uncertainty surrounding trade with the largest trading partner in the United States.
The tariff rate is a reduction compared to the 30% that Trump threatened on July 12 and the 20% he declared imposing on April 2.
Announcing the agreement, Trump said that the EU would not impose a price on American imports. He added that this agreement was “satisfactory on both sides”.
Potentially more prices on the way
The president of the European Commission, Ursula von der Leyen, said on Sunday alongside Trump that the pact “would bring stability. This would provide predictability. This is very important for our companies on both sides of the Atlantic. ”
However, Trump said that 50% on steel prices would remain unchanged and that more prices could still be on the way to pharmaceutical products, of which Ireland is one of the main sources. Trump recently threatened 200% of prices on pharmaceutical products.
During the meeting with Von Der Leyen, trade secretary Howard Lutnick said that semiconductor prices could also be announced in the coming weeks.
By describing parts of the agreement, Trump said that “the European Union will agree to buy in the United States $ 750 billion in energy”. He said the EU would also invest $ 600 billion in the United States. It was not immediately clear what form this investment would take or on what period it would be deployed.
Trump added that EU nations will also buy “a large amount of military equipment”, although a final purchase amount has not yet been set. The European Commission has increased its military supplies, but has focused on purchase mainly from European companies so far.
Trump said that this arrangement would lead to “the opening of all European countries, which I think I could say to be essentially closed”. However, the EU buys hundreds of billions of dollars every year in American products. In 2024, this value was nearly $ 400 billion.
The agreement seems to closely reflect the announced trade agreement with Japan on Tuesday, under which Japanese imports will face a 15%import right, which was also less than Trump threatened.
In a press briefing after the meeting with Trump, Von Der Leyen said that the 15% rate would not accumulate above other rates already in place. She said the United States and the EU have both agreed to apply zero prices to a number of import categories: all aircraft and components, certain chemicals, generic pharmaceutical products, semiconductor equipment and certain agricultural products.
“We will replace Russian gas and oil with significant purchases of us [liquified natural gas]Oil and nuclear fuels, “she said. Von Der Leyen said she estimates that the union will buy $ 250 billion in energy products per year during a period of three years.
“Fifteen percent should not be underestimated, but this is the best we can obtain,” she added the still high rate of tasks that exports from the 27 European countries will be confronted. “Fifteen percent is certainly a challenge for some, but we must not forget that it keeps access to the American market.”
She described the meeting with Trump as “very difficult because we started far from each other”. In the end, she said it was “good and satisfactory”.
But last year, the United States’s average tariff on European Union imports was only 1.2%, according to the chief economist in Europe of capital Economics.
The Irish Prime Minister said in an article on X that he had praised the agreement, but “it means that there will now be higher prices than there have been and that it will have an impact on trade between the EU and the United States, which makes him more expensive and more difficult”.
The German Prime Minister replied by saying: “A trade conflict has been avoided which would have reached the German economy oriented towards exports hardly. This is particularly true for the automotive industry, where current prices will be almost divided by two from 27.5% to 15%. This is precisely where the rapid reduction in prices is increasingly important.”
The European Union is in active negotiation with Lutnick and the US trade representative Jamieson Greer for weeks and had believed that it was extremely close to an agreement before Trump suddenly draws a letter on social truth telling that he was going to increase the 30%prices. The first EU commercial negotiator made several trips through the Atlantic to meet his American counterparts and was ready to speak by phone with Lutnick on Wednesday, according to an EU spokesperson
“The taxation of 30% prices on EU exports would disrupt essential transatlantic supply chains to the detriment of companies, consumers and patients on both sides of the Atlantic,” said Der Leyen after Trump’s July.
Immediately after the letter, the EU said that it would continue to work on an agreement of a type by the new deadline of August 1. But the block continued to simultaneously prepare an in -depth list of American products against which he could apply reprisals if an agreement was not reached among the fears that Trump could end the conferences.
Some of these products included Boeing aircraft, American vehicles and imports of politically sensitive states such as Kentucky Bourbon and Louisiana soy. At the time of the announcement, the EU had about $ 100 billion in reprisals ready to deploy.
Agricultural and corporate groups had warned that prices of 30% on the European Union could have a considerable impact on the price and availability of wines, cheeses and pasta, and called the proposed “incomprehensible” levy.
Cars and other vehicles produced in the EU could still cope with an increase in prices. “The costs for our companies have already reached billions – and with each passing day, the total continues to grow,” the German Automobile Trade Group VDA News said in a statement on July 14.
The 27 countries in the European Union are the largest trading partner in the United States-its $ 605 billion in imports in the United States exceed Mexico, Canada and even China. The most precious category of imports in 2024 was drugs and pharmaceutical products mainly from Ireland, followed by cars, planes and other heavy nations machines such as France and Germany.
Trump threatened separately to impose a 200% tariff on drugs imported into the United States, although it was not applied for at least 18 months. It was not clear if the agreement with the EU would prevent this.
