The US and the European Union reached a wide range of trade agreements and ended a month-long standoff, days before President Donald Trump’s deadline for imposing sudden tariffs, avoiding a full-scale trade war.
The EU pays 15% customs duties on most items, including cars. The tariff rate is half of the 30% Trump threatened to implement from Friday. Brussels also agreed on Sunday to spend hundreds of billions of dollars on US arms and energy products, in addition to existing spending.
Speaking to reporters at Scotland’s Turnberry Golf Resort, Trump welcomed the agreement as “the biggest deal ever.” “I think that’s great for both parties. It’s going to bring us closer,” he added.
European Commission Chairman Ursula von der Reyen said the agreement “provides stability” and “provides very important predictability for our business on both sides of the Atlantic.”
Von Der Leyen defended the contract, saying its purpose was to readjust the trade surplus with the United States. Trump hasn’t made any secrets about using tariffs to sort out the US trade deficit.
The Sunday agreement concluded months of often tense shuttle diplomacy between Brussels and Washington, but neither side revealed details of the agreement or released written material.
It follows a reserve trade agreement signed by the US, signed with Japan, the UK, Indonesia, Vietnam and the Philippines, followed by a 90-day trade ceasefire with China.
So, how does this transaction affect two aspects of global trade that make up almost a third? Will it end the threat of a tariff war?
What did you agree?
At a news event at Trump’s golf resort, Von der Reyen said a 15% tariff would apply to European cars, medicines and semiconductors.
Trump said the US collected steel and aluminum, which many countries have set at 50%, and it was not cut down because of EU products, and rashed the hopes of the bloc’s industry. Elsewhere, aerospace tariffs remain at zero for now.
In exchange for a 15% tariff rate on EU goods, Trump said the bloc would “open the country with zero tariffs” for American exports.
He also said the EU would spend another $7500 billion on US energy products, invest $600 million in the US and purchase military equipment worth “thousands of billions of dollars.”
Von Der Leyen has confirmed that the EU will be trying to purchase $2500 billion in US energy products each year from now until 2027.
“With this agreement, we have access to the largest export market,” she said.
At the same time, she acknowledged that the 15% tariff would become a “partial challenge” for the European industry.
The EU was the largest US trading partner with two-way trade in two-way goods and services last year, reaching nearly $2 trillion.
How did European leaders respond?
German Prime Minister Friedrich Merz welcomed the agreement, avoiding “an unnecessary escalation in transatlantic trade relations.”
He said the trade war would “be hit hard by Germany’s export-oriented economy,” and pointed out that the German automotive industry would have lowered US tariffs from 27.5% to 15%.
However, French Prime Minister François Bailloux called the deal a “dark day” for Europe, saying that Bullock fell into a balanced deal that spared imports from immediate European retaliation.
“It’s a dark day when alliances of free people gathered to affirm their common values and defend their common interests, resigning to submission,” Behle wrote of what he called the “von der Reyen Trump deal.”
Wolfgang Niedermark, a board member of the German Federation of Industrial Affairs, was called “accepting painful tariffs” and “inadequate compromise” with the EU.
The 15% tariff rate “has a major negative impact on Germany’s export-oriented industry,” he said.
Previously, Benjamin Haddad, French Minister of European Affairs, said, “The trade agreement provides temporary stability for economic actors threatened by the escalation of US tariffs, but it is unbalanced.”
Reflecting that sentiment, Dutch Minister of Foreign Trade Hanneke Boma said the deal was “not ideal” and called on the committee to continue negotiations with Washington.
The European Commission is responsible for negotiating trade transactions across the bloc.
The EU ambassador will discuss the contract with the committee this week.
How was the trade carried out before the transaction?
On July 12, Trump threatened to impose a 30% tariff on EU goods if both parties were unable to reach the deal before this Friday.
These “mutual tariffs” are expected to come into effect in addition to the 25% tariffs on automobile and car parts and the 50% collection on steel and aluminum products Trump has already introduced.
On the European side, it is understood that Brussels has promoted a retaliatory tariff package for 90 billion euros ($100 billion) US goods, including auto parts and bourbon, if the lecture collapses.
The EU is a frequent target for escalating Trump’s trade rhetoric, and he accused the Bullock of “ripping” the US.
In 2024, the US operated a $235.6 billion deficit with the EU. According to EU data, pharmaceuticals, auto parts and industrial chemicals were one of Europe’s largest exports to the United States.
How will this transaction affect the US and the EU?
Bloomberg Economics estimates that it raised the effective US tariff rate on European goods to nearly 18% on Friday.
The New Deal cuts that number to 16%, offering a small reprieve for European export companies. Still, the current trade barriers are far higher than before Trump took office in 2025.
According to research group Bruegel, the average US tariff rate for EU exports was just 1.5% at the end of 2024.
William Lee, chief economist at the Milken Institute, told Al Jazeera: “I think (Trump)’s strategy was obvious from the beginning…it’s on the verge of brink.
Meanwhile, U.S. Secretary of Commerce Howard Lutnick said: “President Trump has unleashed one of the world’s biggest economies. The European Union has opened a $20 trillion market and is now fully embracing automotive and industrial standards for the first time.”
