Trump advocates for EU trade agreement, French PM brands it as 'submission'; others express doubt
The United Kingdom, no longer part of the EU, is set to negotiate its own trade arrangements with President Donald Trump on Monday, while the US and the EU have already announced a significant trade deal. The agreement, announced in July 2025, imposes a 15% tariff ceiling on most EU exports to the US, replacing previous higher or uncertain tariffs.
This new tariff structure affects various sectors, including automobiles, car parts, pharmaceuticals, and semiconductors. In exchange, the EU has agreed to purchase $750 billion in US energy products over three years and to make $600 billion in investments in various US sectors by 2029.
For EU businesses, this means an increase in costs due to the higher tariffs, which are now 15% compared to the previous average of under 5%. However, it's a relief from the initially threatened 30% or the 50% tariffs on specific products like steel and aluminum. The deal also includes tariff rate quotas set at historic levels to mitigate some of the impact on key sectors.
Some European leaders and critics have expressed disappointment, fearing the deal disproportionately favors the US and increases European dependence on American markets. The European Commission emphasizes tariff ceilings and investment commitments but continues to assess sector-specific details.
American consumers, on the other hand, can expect some modest price impacts but benefit from the avoided trade disruptions. With significant EU tariffs now set at 15%, American consumers face somewhat higher prices on EU products, particularly autos and car parts. However, this tariff level is a compromise from higher threatened tariffs that could have driven prices even higher.
The increased EU investment in the US and purchases of US energy and military equipment could have positive effects on the US economy and consumer employment indirectly. The deal also brings a new and stable tariff framework, avoiding abrupt increases or trade conflict that could raise prices further.
Reactions from European leaders are mixed. While the deal prevents a harsher tariff war, many are critical or dismayed, concerned that it skews advantages towards the US and pressures the EU into greater economic dependency. The EU Chief, Ursula von der Leyen, announces the EU's commitment to purchase $750 billion worth of US energy and increase its investment in the US by $600 billion.
The agreement has been met with various responses. French President Emmanuel Macron has not yet commented publicly, while French Prime Minister Francois Bayrou writes that it is a "dark day" for the alliance. European Trade Commissioner Maros Sefcovic states that this is the best deal the EU could get under difficult circumstances.
American consumers are expected to largely front the bill of increased costs from the deal, but American carmakers may benefit from the EU dropping its tariffs on US-made vehicles from 10% to 2.5%. The deal has been described as a "submission" by some European leaders, but many view it as the "least bad option" or "without enthusiasm."
The agreement, which accounts for nearly a third of all trade globally, establishes some form of clarity when dealing with the EU's number one trading partner. It's a significant step towards stabilizing trade relations between the US and the EU, despite the cautious or critical responses from European leaders.
- The proposed tariff structure, with a 15% ceiling, is affecting various industries in the EU, such as automobiles, pharmaceuticals, and semiconductors, as it increases costs compared to the previous average of under 5%.
- In the aftermath of the trade deal, American consumers might face somewhat higher prices on EU products, especially autos and car parts, but this is a compromise since initially threatened tariffs could have driven prices even higher.
- The EU's commitment to increase investment in the US by $600 billion and purchase $750 billion in US energy products over three years could have positive effects on the US economy and consumer employment, ultimately contributing to the stabilization of trade relations between the US and the EU.
