Following the looming threat of 30 per cent tariffs on EU imports, the United States and EU ended months of uncertainty with a trade agreement to reduce import tariffs to 15 per cent.
The agreed rate applies on key European exports including automobiles, pharmaceuticals, electronics, and industrial machinery.
The two sides have also agreed on zero-for-zero tariffs on a number of strategic products. including all aircraft and component parts, certain chemicals, certain generics, semiconductor equipment, certain agricultural products, natural resources and critical raw materials.
The EU executive says it will keep working to add more products to this list.
“Today’s deal creates certainty in uncertain times,” said the Commission president Ursula von der Leyen: “It delivers stability and predictability, for citizens and businesses on both sides of the Atlantic. This is a deal between the two largest economies in the world. We trade USD 1.7 trillion per year. Together we are a market of 800 million people. And we are nearly 44% of global GDP. Just a few weeks after the NATO summit, this is the second building block, reaffirming the transatlantic partnership.”
On steel and aluminium, with both the US and EU facing the common external challenge of global overcapacity, the EU promises a quota system will be put in place, as well as a reduction in tariffs to reduce barriers between the trading partners.
The partners have agreed to increase energy cooperation, which does include purchases of US energy products to diversify EU sources of supply and contribute to Europe’s energy security. Russian gas and oil are to be replaced with ‘significant’ purchases of US LNG, oil and nuclear fuels.
US AI chips will help power the EU’s AI gigafactories and help the US to maintain their technological edge.
The EU is also signalling better access for American products to the European market, making the point that this will benefit European consumers and make Europe’s own businesses more competitive.
With this deal’s framework, the two sides are saying they will be able to further reduce tariffs on more products, address non-tariff barriers, and cooperate on economic security.
