The US and the European Union have reached a broad trade agreement that avoids a full-scale transatlantic trade war day ahead of the August 1 deadline for the introduction of sudden tariffs.
The deal places a 15% tariff on most European goods, but came after a private meeting on Sunday between US President Donald Trump of Scotland and President Ursula von Leyen of the European Commission.
“It was a very interesting negotiation. I think it’s great for both parties,” Trump told reporters at Turnberry Golf Resort, celebrating the agreement as “the biggest deal ever.”
Von Der Leyen said the agreement “provides stability” and “provides very important predictability for our business on both sides of the Atlantic.”
Sealed days before Washington imposed a 30% tariff on EU imports, the deal is the most important of Trump’s trade deals announced so far, following a preliminary agreement with Japan, the UK, Indonesia, Vietnam, the Philippines and China with a 90-day trade ceasefire.
The EU is the largest trading partner in the United States, with two-way trade in goods and services reaching around $2 trillion last year.
Under the contract, the 15% tariff applies widely to European exports, including automobiles.
A baseline rate of 15% indicates a reprieve for the European automotive industry. This has been liable for 25% in addition to the existing 2.5% tax since April.
Under the contract, limited range of goods, such as airplane parts, semiconductor equipment, certain chemicals, and certain agricultural products, are completely exempt from customs duties.
Trump said the EU has also worked to increase its overall investment in the US by $600 million and purchase around $750 billion worth of US energy, along with ordering large military equipment.
“We are open to all of the European countries,” Trump said.
Still, it was hardly included in the announcement.
“The big warning about today’s trading is that there’s nothing on paper yet,” Carsten Brzeski, global head of macros for ING research, said in a memo.
“I hope the next hours and days will be more clear. So you’ll need to get a rating just for a pinch of salt.”
The breakthrough follows a tense exchange of tensions between European officials and Trump, which the EU has long been criticized for its unfair trade practices.
Just before negotiations began, Trump called the existing arrangement “a very one-sided deal, very unfair to the US.”
On Sunday, von der Leyen pointed to the combined economic forces of the US and Europe, saying their trade includes “hundreds of millions of people and trillions of dollars.”
Von der Leyen also acknowledged Trump’s “severe” reputation as a negotiator, to which he replied: “But fair.”
Trade disputes have been averted
Earlier this month, negotiations appeared to be nearing collapse when Trump threatened to advance 30% tariffs unless the EU had agreed to with Japan recently.
When asked if he would accept something lower, Trump said “No.”
In anticipation of the possibility that the side would not be able to reach the deal, Brussels had prepared a long list of retaliatory tariffs targeting everything from beef and beer to Boeing aircraft and car parts.
German Prime Minister Friedrich Merz welcomed the agreement.
“The agreement succeeded in avoiding a trade dispute that would hit the export-oriented German economy hard,” Mertz said in a statement.
“This applies especially to the automotive industry, where the current 27.5% tariffs are almost half of 15%.”
Italian Prime Minister Giorgia Meloni said it was “positive” that the trade deal was reached, but she would need to look at details to properly determine the agreement.
Other European lawmakers were more important.
Danish MP Rasmus Jarlov said the announcement “has nothing to celebrate.”
“In both Europe and America, almost everything will be more expensive. We’re all going to get worse,” said Jallov, a member of the conservative People’s Party, about the X.
“The White House economic illiteracy is causing serious damage to the West.”
Trump, who will be in Europe until Tuesday, is expected to meet British Prime Minister Stage, Kiel on Monday, and is also expected to focus on trade.
Another US-UK trade framework was announced in May, but many elements of the contract have not been revealed.
On Tuesday, Trump travels to Aberdeen to open a third golf course under his last name, then departs for Washington.
