AP:
A major trade agreement between U.S. President Donald Trump and European Commission President Ursula von der Leyen has helped avoid a deeper conflict by setting a 15% tariff on most European imports, instead of the 30% Trump had threatened if no agreement was reached by August 1.
While the deal prevents a trade war, it will still increase costs for U.S. consumers and reduce profits for European exporters due to higher import taxes.
Key Takeaways From the Agreement:
Major Uncertainties Remain
The announcement, made during Trump’s visit to Scotland, lacks specifics. A 15% tariff will apply to most EU imports into the U.S., including vehicles, semiconductors, and pharmaceuticals. This is lower than the previously proposed rates of 20%, 30%, or even 50%.
Both sides agreed to remove tariffs entirely on certain “strategic” items — like aircraft parts, specific chemicals, semiconductor machinery, select farm goods, and raw materials — though exact items weren’t named. Von der Leyen said more products may be added in future talks.
but expect significant price hikes in the future. The brand assembles 35% of its U.S. vehicles in Alabama, offering limited tariff protection.
A Longstanding Trade Imbalance
Before Trump’s presidency, the U.S. and EU had one of the world’s most stable trade relationships, with tariffs averaging under 1.5%. However, Trump has long criticized the EU’s €198 billion trade surplus with the U.S., claiming European markets are unfairly closed to American vehicles.
Despite the goods trade gap, U.S. firms outperform in services — like tech, legal, and financial sectors — and many European imports come from American-owned subsidiaries, helping to balance the broader trade relationship.
US-EU trade agreement eases tensions but raises costs for businesses and consumers
