The European Union and the United States have reached a new trade agreement, bringing an end to months of tension between the two economic giants.
Following high-stakes negotiations between President Donald Trump and European Commission President Ursula von der Leyen in Scotland, the two leaders confirmed a US import tariff of 15% on all EU goods. This figure is half of the 30% tariff Trump had earlier planned to impose.
In exchange, the EU will eliminate tariffs on select American products, giving US exporters improved access to European markets. Von der Leyen described the agreement as one that would bring stability for both allies, who together are responsible for nearly a third of the world’s trade activity.
Trump has repeatedly turned to tariffs as a central part of his trade strategy, aimed at shaking up long-standing trade relationships and reducing the US trade deficit.
The breakthrough was reached during private discussions at Trump’s Turnberry golf course in South Ayrshire, where the US president is currently on a five-day visit.
“We have reached a deal. It’s a good deal for everybody,” Trump said after the meeting. “It’s going to bring us closer together,” he added.
Von der Leyen echoed that sentiment, describing the outcome as a “huge deal” and acknowledging the “tough negotiations” that led to the agreement.
As part of the deal, the EU has committed to investing $600bn (£446bn) in the US, including in military equipment, and an additional $750bn in American energy such as liquified natural gas, oil and nuclear fuels. Von der Leyen said this investment would play a key role in cutting Europe’s reliance on Russian energy.
A number of goods will be exempt from tariffs altogether, including aircraft and aircraft components, some chemicals, and certain agricultural products. Meanwhile, a separate deal specifically covering semiconductors is reportedly in the works.
However, Trump confirmed that the existing 50% US tariff on global steel and aluminium imports will remain unchanged.
“I want to thank President Trump personally for his personal commitment and his leadership to achieve this breakthrough,” Von der Leyen said. “He is a tough negotiator, but he is also a dealmaker.”
Both Washington and Brussels are presenting the agreement as a win. For the EU, it avoids the more damaging 30% tariff originally on the table. Although the 15% rate is higher than the UK’s 10% agreement, it is on par with what Japan secured just a week earlier.
For the US, the deal could bring in an estimated $90bn in annual tariff revenue based on last year’s trade figures, along with hundreds of billions of dollars in pledged investment from the EU.
Trump hailed it as the largest trade agreement ever signed, and the latest success in his effort to reshape America’s economic relationships.
Trade in goods between the EU and the US totalled around $976bn last year. The US imported about $606bn worth of goods from the EU, while exporting roughly $370bn to Europe. This trade gap has long been a point of concern for Trump, who claims that such deficits are evidence the US is “losing” in global commerce.
Had the agreement not been reached, a wide range of European products, such as Spanish pharmaceuticals, French cheese, German electronics and Italian leather, would have faced new tariffs. In retaliation, the EU had been preparing levies on American goods like car parts, beef and Boeing aircraft.
Now, with both sides striking a deal, attention turns to implementation, and to what extent the promises made on the fairway will translate into meaningful change for businesses on both sides of the Atlantic.
