Customs union advancement with the USA: An initial stride - no reason for despair
The recently announced EU-US trade deal includes a 15% tariff ceiling on most goods, including agricultural products, but specific details regarding agricultural products exempt from this ceiling remain scarce.
According to the deal, strategic sectors such as semiconductor manufacturing equipment and aircraft components are exempt from new tariffs. However, tariffs on pharmaceuticals and other products remain at 15%, higher than the previous 0% levels in some cases.
The European Commission expects the US to issue executive orders to concretize the exemptions agreed by handshake, but detailed implementation specifics, particularly on agricultural tariffs, are yet to be revealed.
The deal may alleviate severe tariff pressures on German agricultural exports, as it results in a 15% tariff rate instead of the previously threatened 25-30% or higher tariffs. Yet, without clear tariff exemptions for specific agricultural products, some exporters could still face significant tariff costs.
The impact on the German food industry is not yet clear, with sources not providing a direct assessment. However, it is expected that the retained or newly imposed tariffs might affect pricing, export volumes, and industry planning, especially for sensitive products impacted by the reciprocal tariffs policy.
The German food industry generates an annual turnover of 232.6 billion euros with around 6,000 companies, employing approximately 644,000 people. The industry is predominantly composed of medium-sized enterprises, with 90% falling under this category.
Olivier Kötsch, Managing Director of the Federal Association of the German Food Industry, is cautiously optimistic about the tariff agreement. He emphasizes the need for affordable energy, less bureaucracy, and reliable export promotion.
Federal Minister of Food and Agriculture Alois Rainer has announced an export strategy, aiming for a reliable, rule-based free trade with the USA. The European internal market also needs to be consolidated to strengthen the international competitiveness of the food industry.
The EU and USA have announced a deal to avoid 30% US import tariffs on EU products and potential EU counter-tariffs. The deal sees a flat tariff rate of 15% agreed upon for trade between the EU and USA, which will undoubtedly burden the trade.
The exact details of the agricultural product exemptions and the impact on the German food industry may become clearer once the US issues the expected executive orders following the July 2025 handshake agreement. The European Commission is urged to view the tariff agreement as a starting point for further negotiations.
- The EU-US trade deal, despite offering an exemption for strategic sectors, leaves unclear details about specific agricultural products exempt from the 15% tariff ceiling, which could burden German agricultural exporters.
- The agreement between the EU and US imposes a flat tariff rate of 15% for most goods, including agricultural products, which might impact the pricing, export volumes, and industry planning in the German food industry.
- The German food industry, a significant part of the European economy, is closely watching the implementation of the EU-US tariff agreement, particularly the agricultural product exemptions, as they may have far-reaching effects on the industry, such as changes in energy costs, bureaucracy, and export promotion.
