EU–U.S. Trade Deal Avoids Tariff War

President Donald Trump and European Commission President Ursula von der Leyen announced that the two sides have reached a trade deal, averting a tariff war ahead of the August 1 deadline.

The U.S. will impose a 15% tariff on most European goods, including cars. This rate is lower than Trump’s earlier threat of 30%, but higher than the 10% baseline the EU had hoped for.

Some products—such as aircraft, components, chemicals, and pharmaceuticals—will be exempted.

The EU committed to purchasing $750 billion in U.S. energy, investing an additional $600 billion in the U.S. economy above current levels, and buying hundreds of billions of dollars in U.S. military equipment.

Trump described it as “the biggest and most powerful deal ever,” while von der Leyen called it “a good deal, after tough negotiations.”

Prior to the agreement, the EU had been preparing for a no-deal scenario, with counter-tariffs and potential use of its Anti-Coercion Instrument.

European leaders from Ireland, Germany, the Netherlands, and Italy welcomed the deal, seeing it as a way to avoid escalation and bring market stability, though concerns remain about the impact of 15% tariffs.

The EU–U.S. trade relationship was valued at $1.97 trillion in 2024, with the EU holding an overall surplus of around €50 billion.