The trade deal between the United States and the European Union, announced by US President and European Commission President, introduces significant changes to tariffs and trade practices.
Key Details of the Trade Deal
Agreement Components
- The agreement sets a 15% tariff on most European goods imported into the US, affecting products such as cars, computer chips, and pharmaceuticals.
- Zero tariffs were agreed upon for strategic goods like aircraft and aircraft parts, certain chemicals, semiconductor equipment, some agricultural products, and critical raw materials.
- The EU will purchase USD 750 billion worth of natural gas, oil, and nuclear fuel from the US to replace Russian energy supplies, alongside an additional USD 600 billion investment in the US.
Exclusions and Pending Issues
- The existing 50% US tariff on imported steel remains unchanged; further negotiations are planned to address the global steel glut and establish import quotas.
- Pharmaceuticals are not included in the current deal, with discussions on this front remaining separate.
- Unspecified agricultural tariffs that cannot be lowered remain a point of contention.
Impact of the Agreement
- The 15% tariff is higher than the average pre-Trump tariff of around 1% and Trump's minimum 10% baseline, potentially increasing consumer prices or reducing profits for European companies.
