The EU and the US Reach a Trade Agreement to Avoid a Tariff War

US President Donald Trump and European Commission President Ursula von der Leyen announced that they have reached a trade agreement, avoiding the tariff war originally scheduled for August 1.

The US will impose a 15% tariff on most European goods, including cars. This rate is lower than the 30% threatened by Trump earlier, but higher than the 10% desired by the EU.

Certain products will be exempt, including airplanes and their parts, chemicals, and pharmaceuticals.

The EU has committed to purchasing $750 billion worth of US energy, investing an additional $600 billion in the US on top of current levels, and procuring hundreds of billions of dollars in US military equipment.

Trump stated that this is the "largest and most powerful agreement in history," while von der Leyen referred to it as a "good agreement after tough negotiations."

Before reaching the agreement, the EU had prepared for a "no-deal" scenario, including retaliatory tariffs and the possible use of **“anti-coercion tools.”**

Leaders from EU countries such as Ireland, Germany, the Netherlands, and Italy welcomed the agreement, believing it helps avoid conflict and brings market stability, but they still expressed concerns about the impact of the 15% tariff.

By 2024, the total trade relationship between the EU and the US will reach $1.97 trillion, with the EU maintaining a surplus of about €50 billion.