Preliminary EU 15% Tariff Agreement: A New Chapter in US–EU Trade Relations

Recently, at Trump Turnberry Golf Course in Scotland, U.S. President Donald Trump and European Commission President Ursula von der Leyen announced a preliminary trade framework under which the United States will apply a uniform 15% tariff on most EU exports, averting the risk of a full-scale trade war.

1. Why 15%? The New “Midpoint” Tariff

• Trump initially threatened a 30% tariff on EU goods. After several intense negotiation rounds, both sides settled on 15%—up from the existing 2.5% on cars but matching the rate in the recent U.S.–Japan deal.

• This 15% rate sits between Trump’s original 30% demand and the EU’s desired 10%, and it will apply across key sectors such as automobiles, pharmaceuticals, and chemicals.

2. EU Concessions and Exchange Commitments

What did the EU give up to secure this tariff deal?

1. Major Investment Pledge

   • Over the next three years, the EU will invest over $600 billion in the United States, focusing on energy, defense equipment, automotive, and semiconductors. Simultaneously, the EU committed to purchasing $750 billion in American energy to reduce reliance on Russian supplies.

2. Selective Zero‑Tariff Exemptions

   • Aircraft and parts, certain chemicals, selected agricultural products, and semiconductor machinery will remain duty‑free, fostering mutual gains in high‑tech and manufacturing supply chains.

3. Steel and Aluminum Tariffs Remain

   • The 50% global tariff on steel and aluminum imposed by the U.S. is not included in this deal. Whether it can be negotiated down remains to be seen.

3. Reactions and Potential Risks

Stakeholders are split, noting the framework nature of the deal and the need for legislative approvals.

• EU Industry Concerns: Germany’s industrial association warns that a 15% tariff will still “sting,” forecasting a 0.11%–0.15% drop in output; France’s cosmetics sector fears thousands of job losses.

• U.S. Budget Impact: A leading think tank estimates nearly $90 billion in additional federal revenue, but higher import costs could hurt consumers.

• Next Steps: This remains a framework agreement. Detailed product lists, exemption criteria, and effective dates must be codified and approved by both the U.S. Congress and the European Council.

4. The Emerging Trade Landscape

1. Rebalancing US–EU Relations

   • Von der Leyen emphasized that the deal “rebalances” the transatlantic partnership while preserving core trade flows.

2. Supply Chain Realignment

   • Aligning EU and Japanese tariffs at 15% could advantage EU–Japan supply chains in the U.S. market, while U.S.–Mexico–Canada and Asian partners face relatively higher rates.

3. Geopolitical Implications

   • Against the backdrop of the Ukraine conflict and US–China tensions, greater US–EU energy and security interdependence may strengthen strategic coordination, including on China policy.

While this 15% tariff framework eases immediate tensions, the lack of detail means that patience and skillful diplomacy will be required in the coming weeks. The EU must balance supporting exporters with meeting its investment pledge; the U.S. must weigh tariff revenues against inflation and consumer costs. Once the final texts and implementation rules are approved, the true impact of this “new tariff era” will become clear.