On Sunday, the USA and the EU reached a trade agreement following negotiations between President Donald Trump and European Commission President Ursula von der Leyen in Scotland. Tariffs on all EU European goods imported into the USA will be 15%. The agreement will come into force on Friday.
Initially, Washington announced 30% tariffs on goods from the EU. Negotiations between the two allies, which account for almost a third of global trade, led to a halving of the tariffs.
Donald Trump announced the terms of the deal: the EU will purchase energy resources from the USA worth $750 billion and invest about $600 billion in the American economy, as well as purchase a “huge amount of military equipment.” Trump stated that this is the “largest deal in history,” surpassing the $550 billion agreement signed last week with Japan, and will expand ties between the transatlantic powers after many years of what he considers unfair treatment of American exporters.
However, as Reuters writes, citing a statement from a senior US administration official, Trump reserves the right to raise tariffs in the future if European countries do not fulfill their investment commitments.
Von der Leyen, calling Trump a tough negotiator, stated that the 15% tariffs apply “across the board,” and later told reporters that this is “the best we could get.” Although the tariffs apply to most goods, including semiconductors and pharmaceuticals, there are exceptions. The USA will maintain 50% tariffs on steel and aluminum. Von der Leyen suggested that they could be replaced with a quota system, proposing to continue discussing this issue.
The European Commission President also stated that neither side will impose tariffs on aircraft and aircraft parts, certain chemicals, generic drugs, agricultural products, semiconductor equipment, natural resources, and critical raw materials.
“We will continue to work to add more goods to this list,” said von der Leyen, adding that alcoholic beverages are still being discussed.
As Bloomberg notes, the agreement was reached less than a week before the deadline for the 50% increased tariffs, which Trump had previously threatened the EU with. Within an hour of the announcement of the signing of the framework agreement, the euro rose by about 0.2% against the dollar, sterling, and yen.
Donald Trump claims that his imposition of tariffs brings the USA “hundreds of billions of dollars” in revenue, while dismissing economists' warnings about the risk of inflation.
Photo: Reuters