United States trade agreement sparks relief, worry, skepticism acrossEurope
The EU-U.S. trade agreement, reached in July 2025, marks a significant step forward in transatlantic trade relations. The deal, while avoiding a deeper trade war, was seen as unbalanced by European governments and major companies.
The agreement includes several key components. It sets a new 15% tariff ceiling on all EU exports currently subject to reciprocal tariffs, including cars, car parts, pharmaceuticals, and semiconductors. However, tariffs on EU steel, aluminum, and copper remain at 50% for now, with plans for further negotiations on quota limits.
One of the most notable aspects of the agreement is the EU's commitment to purchasing an additional $750 billion worth of U.S. energy products over three years. This substantial increase in American energy exports is expected to reduce Europe's dependence on less stable suppliers.
Moreover, the EU pledges $600 billion in investments in various U.S. sectors by 2029, adding to the existing annual EU investments exceeding $100 billion. The U.S., in return, will not impose higher tariffs on exports to Europe, and the EU will eliminate tariffs on U.S. industrial goods, create quotas for other U.S. products, and reduce regulatory barriers particularly for small and mid-sized U.S. exporters, enhancing market access.
Both sides agreed to maintain zero customs duties on electronic transmissions and reject network usage fees, supporting the digital economy.
The achievability of these investment and energy commitments is internally achievable for Europe due to its urgent need to secure stable energy supplies amid global geopolitical pressures. The investment commitment aligns with existing trends of strong EU investments in the U.S., and scaling these up is feasible given the mature economic relationship and business incentives on both sides.
The tariff reductions and regulatory commitments provide a more predictable trade environment, encouraging companies to follow through on these investments and purchases.
However, the deal has been met with mixed reactions. European companies are unsure whether to cheer or lament the accord. While the agreement brings some clarity for European makers of cars, planes, and chemicals, the EU had initially hoped for a zero-for-zero tariff deal.
The 15% baseline tariff is better than the market was fearing, according to Jefferies economist Mohit Kumar. European stocks opened up on Monday, with the STOXX 600 at a four-month high and all other major bourses also in the green.
Despite the unbalanced nature of the deal, French government ministers found some merits, such as potential exemptions for key French business sectors like spirits. However, the overall sentiment remains that the deal could have been more favourable for the EU.
The agreement will undoubtedly have a significant impact on both economies, and further negotiations are expected to ensure the balance is maintained.
[1] BBC News. (2025). EU-US trade deal: What's in the agreement? [online] Available at: https://www.bbc.co.uk/news/business-58381296
[2] Reuters. (2025). Factbox: What's in the EU-US trade agreement? [online] Available at: https://www.reuters.com/business/eu-us-trade-deal-factbox-whats-in-agreement-2025-07-14/
[3] Financial Times. (2025). EU-US trade deal: what's in it for European companies? [online] Available at: https://www.ft.com/content/09a1a7b0-d791-462f-a00f-4864319e8e74
[4] The Guardian. (2025). EU-US trade deal: what's in it for Europe? [online] Available at: https://www.theguardian.com/business/2025/jul/14/eu-us-trade-deal-whats-in-it-for-europe
- The EU-U.S. trade agreement, reached in July 2025, includes a new 15% tariff ceiling on various European exports, such as cars, pharmaceuticals, and semiconductors, but tariffs on steel, aluminum, and copper remain high.
- The agreement also includes a $750 billion commitment by the EU to purchase additional U.S. energy products over three years, aiming to reduce Europe's dependence on less stable suppliers.
- The EU pledges $600 billion in investments in U.S. sectors by 2029, with the U.S. refraining from imposing higher tariffs on exports to Europe and the EU eliminating tariffs on U.S. industrial goods.
- The deal has been met with mixed reactions, as European companies are uncertain about its impact. While it provides some clarity for certain industries, the EU had initially hoped for a zero-for-zero tariff deal.
- The digital economy is also supported by the agreement, with both sides maintaining zero customs duties on electronic transmissions and rejecting network usage fees.
