by European Union and US Reach Trade Deal
European automakers received positive news: US tariffs on their products have been reduced to 15%, and this change is effective retroactively from August 1st. This occurred three weeks after a new trade deal was concluded between the US and the European Union at the end of July.
Background of Tariff Changes
Prior to President Donald Trump’s return to office, EU tariffs were only 2.5%. However, automakers recently faced tariffs of 27.5%, and before last month’s deal, Trump threatened to impose blanket tariffs of 30% on most key industries.
US And EU Reach Mega Trade Deal That Could Shake Up The Auto Industry
Deal Details and Terms
Automobiles were excluded from the new base tariffs of 15% following a meeting between Trump and European Commission President Ursula von der Leyen. It is now confirmed that they also qualify for the reduced tariffs.
In exchange for the reduced tariffs, which the US agreed to apply retroactively from August 1st, the European Union will eliminate tariffs on all industrial goods from the US and must provide preferential market access for American seafood and agricultural products. This includes nuts, dairy products, fresh and processed fruits and vegetables, processed food products, seeds, soybean oil, as well as pork and bison meat.
Procurement Plans and Consequences
Furthermore, the EU plans to purchase liquefied natural gas, oil, and nuclear energy from the US worth $750 billion by 2028. It is also planned to purchase at least $40 billion worth of AI chips from America for data centers, and the EU has committed to “significantly increase” its purchase of military and defense equipment from the US.
In turn, the US will implement the reduced 15% tariffs on European automobiles only after the EU initiates the legislative process for importing certain goods. According to EU Trade Commissioner Maroš Šefčovič, the bloc is “working very hard” to complete this process.
Impact on Other Industries
However, the news is not as good for the European wine and spirits industry, which exports $9 billion worth of goods to the US annually. The EU had hoped to secure an exemption for this industry and reduce tariffs to zero, but this was not achieved.
This deal could have significant implications for global trade relations, especially in the context of economic pressure and strategic interests of both sides. Reducing tariffs on automobiles may help stabilize the market, but other sectors such as agriculture and energy will also undergo changes, which could lead to a redistribution of economic flows in the future.
