The trade deal between the United States and the European Union was formally agreed upon on Thursday. It involves a 15% tariff on various EU imports such as cars, medicine, computer chips, and timber.
The EU pledged to remove tariffs on all American industrial goods and offer favorable market access for various seafood and agricultural products in a combined statement spanning three and a half pages.
Washington is planning to lower the high tariffs on cars and automotive parts which currently stand at 27.5%, a significant challenge for European car manufacturers. The reduction is contingent on Brussels introducing the required legislation to implement the agreed tariff reductions on American goods.
U.S. President Donald Trump and European Commission President Ursula von der Leyen revealed the deal on July 27 at Trump’s opulent golf resort in Turnberry, Scotland, after a lengthy discussion session that concluded months of talks.
The two leaders met once more this week during the talks to stop Russia’s war in Ukraine, and they both commended their trade deal as a significant accomplishment. They stated that the agreement could be broadened gradually to include more sectors and enhance market entry.
European car manufacturers may receive relief from current U.S. tariffs in a matter of weeks, according to a senior U.S. government official who requested anonymity.
The joint statement was described as a step towards mutual accountability to ensure that both parties uphold the commitments made the previous month, according to the authority.
“We are collaborating with the European Union to ensure that they are under sufficient pressure to secure the necessary mandate for initiating the legislative process to lower their tariffs, as they have committed to,” stated the official.
We trust that they will accomplish this. It is beneficial for all parties to ensure alignment and act simultaneously.
The U.S. tariff reduction on vehicles and vehicle components will be implemented once the EU enacts legislation, potentially providing retroactive relief to car manufacturers. The timing of when Brussels will initiate the legislative process is currently uncertain.
The US has agreed to implement only favorable nation tariffs on EU aircraft and parts, generic pharmaceutical products, chemical precursors, and scarce natural resources like cork starting from September 1st, as mentioned in the joint statement.
The EU also restated its plan to purchase $750 billion worth of liquefied natural gas, oil, and US nuclear energy products, along with $40 billion in American-made artificial intelligence chips.
EU companies plan to invest over $600 billion in US strategic sectors by 2028.
Both parties committed to tackling “unwarranted obstacles to digital trade,” as stated, and the EU agreed to refrain from implementing network usage charges.
They also agreed to discuss rules of origin in order to make sure that both countries benefit mostly from the agreement.
They also mentioned that they will assess collaboration to safeguard their steel and aluminum markets from surplus production, ensuring secure supply chains between them, such as through tariff quotas.
Andrea Shalal and David Lawder’s report.
