US-EU Tariff Agreement: Behind the Compromise, Undercurrents Flowing
On July 27, 2025, the US and EU reached a tariff agreement at a critical juncture of trade friction. This 'reconciliation' seems to have quelled the storm, but in reality, it has buried many hidden dangers.
Prior to this, the US issued a stern warning that if an agreement was not reached by August 1, a 30% tariff would be imposed on EU goods. The EU also stood firm, preparing to retaliate with a 25% tariff on US whiskey, airplanes, and other products. Under the pressure of an impending trade war, both sides took a step back. The US imposed a 15% tariff on EU exports of automobiles, pharmaceuticals, and other goods, while the EU had to invest $600 billion in the US, purchase $750 billion in US energy and military equipment, and for the first time fully accept US automotive and industrial standards, opening up its vast market. However, the US's 50% tariffs on EU steel and aluminum remained unchanged.
As soon as the agreement was reached, the EU was thrown into turmoil. European Parliament officials harshly criticized the agreement as 'severely unbalanced,' accusing the US of 'extorting' allies with tariffs, and stating that the $600 billion investment would severely impact European domestic industries. Finland's Minister of Foreign Trade also complained that the 15% tariff was too heavy a burden for European companies, making it difficult to sustain in the long run.
Moreover, many key issues in the agreement were left unclear. Tariffs on steel and aluminum, chip tariffs, and spirits tariffs, among others, would have to be discussed further in the next two weeks. The US Secretary of Commerce stated that chip tariffs would be determined within two weeks, causing anxiety among EU businesses.
In the short term, the agreement has avoided a full-blown US-EU trade war, temporarily easing the concerns of European exporters such as the German automotive industry. However, in the long term, this is merely a stopgap measure. Whether the EU's investment commitments can be realized depends entirely on the US's stance. Should US policies change and taxes be reimposed, these investments would evaporate. Additionally, the agreement does not address the fundamental contradictions between the US and EU regarding digital taxes, agricultural subsidies, and other issues, making future disputes likely. The US is also reshaping global trade rules through a 'divide and conquer' strategy, leaving the EU increasingly passive in global trade. The US-EU tariff agreement is like a brief calm before the storm, and beneath the surface, new conflicts may be brewing.
