The European Union and the United States have reached a trade deal, avoiding a potentially devastating trade war. However, the deal has sparked criticism, with many details yet to be ironed out and discrepancies between the two sides. European Commission chief Ursula von der Leyen and US President Donald Trump announced the agreement, which includes a 15% tariff on most EU exports to the US.
While this is an improvement on the 30% tariff initially threatened by Trump, it’s still a substantial hike from the former 4.8% average rate. Many European leaders expressed regret that the EU hadn’t adopted a tougher negotiating stance. “I would have wished for a different outcome,” Germany’s finance minister Lars Klingbeil said. “Still, all in all, it is good that there is an agreement with the US, that there are no further escalations.”
The agreement is not legally binding, but rather a set of political commitments. Commission trade spokesperson Olof Gill emphasized that additional negotiated exemptions will flow from these commitments. French President Emmanuel Macron said the agreement is “the first step in a negotiation process that will continue.” Trade agreements typically take 18 to 24 months of bilateral negotiations, according to Cinzia Alcidi of the Centre for European Policy Studies in Brussels.
There are several discrepancies between the US and EU statements on the agreement. The White House says pharmaceuticals and semiconductors will fall under the 15% tariff, while the EU claims these sectors will remain at 0% for now, with future tariffs capped at 15%. The US says tariffs on steel and aluminium will remain at 50%, while the EU claims they will work to cut these numbers and replace them with a quota system.
The language used to describe the EU’s investment commitments also differs. The US statement says the EU “will” purchase $750 billion in US oil, liquefied natural gas, and nuclear energy products, while the EU says it “intends” to do so. Cinzia Alcidi notes that the EU cannot decide purchases on behalf of the private sector, and it’s unclear if the US can provide such amounts.
The 15% tariffs will affect EU countries differently, with Germany, Ireland, and Italy particularly exposed due to their partnerships with the US. Germany’s carmakers will face billions in extra costs, according to Hildegard Müller, president of the German Association of the Automotive Industry. Ireland, which is heavily reliant on the US as an export market, welcomed the agreement through gritted teeth. “It is what it is and we move on,” said Neale Richmond, a minister of state in Ireland’s foreign affairs department.
Italy’s agricultural, pharmaceutical, and automotive sectors will also suffer, with the country’s GDP potentially taking a 0.2% hit. Cristiano Fini of the Italian Confederation of Farmers said the deal felt more like “a surrender” than an agreement. Several Italian trade associations are now clamouring for compensation from the EU to make up for predicted losses.