US President Donald Trump announced on Sunday that he had reached a trade agreement with European Union President Ursula von der Leyen.

"We reached an agreement. It's a good agreement for everyone," Trump told reporters after talks with von der Leyen at his golf resort in Turnberry, Scotland. The EU chief also called it a"good agreement."

What does the EU-US trade agreement involve?

According to Trump, this is the largest agreement in US history with the EU. The American leader also announced that the European Union will purchase American military equipment. He added that the EU-US agreement on steel and aluminum remains unchanged.

Trump said the trade agreement"will be excellent" for the automotive market and will have a major impact on agriculture. He said the agreement would impose a 15 percent tariff on EU exports to the United States—the same level Japan received—including on the bloc's key automotive sector, which is currently taxed at 25 percent.

“We agreed that the tariff on cars and everything else would be a direct tariff of 15 percent,” Trump said.

He also added that the EU had agreed to purchase energy worth $750 billion from the United States, as well as to allocate an additional $600 billion for investments in the country.

Expectations were high before the talks. The chances of agreement were 50%.

- They have to open their market to American products - Donald Trump said earlier on Sunday during a press conference, just before talks on tariffs with European Commission President Ursula von der Leyen. Trump confirmed on Sunday that the chances of concluding a US-EU trade agreement are 50/50. However, he admitted that if an agreement were reached on Sunday, it would be in force for many years. - This is the most important agreement - he added.

"I'm not optimistic, I give a 50 percent chance of signing the US-EU agreement (...). We have three or four sticking points" said the US president, adding that the main sticking point was"fairness," citing barriers to US exports of cars and agricultural products."If it works, it will be something very important," he noted. He emphasized that the agreement will not cover pharmaceutical products, which should be manufactured in the US. According to him, steel and aluminum, which are subject to a 50 percent tariff, will also not be excluded from the agreement.

Ursula von der Leyen, when asked about the chances of a deal, echoed Trump's statement that it was a 50/50 chance. However, Donald Trump made it clear that there was no chance of a tariff rate lower than 15 percent.

The US and the EU wanted to reach an agreement

Donald Trump met with the President of the European Commission despite the private nature of his visit to Scotland, specifically Turnberry in the southwest of the country, where his luxury golf resort is located. As reported by AFP on Friday, Trump assessed the chances of concluding a trade agreement with the EU at around 50 percent. He added, however, that the EU very much wants it and hoped to conclude with the EU"the best deal of all." On Thursday, the European Commission announced that an agreement was"within reach."

AFP, citing information provided by European diplomats, indicated that the agreement negotiations include a 15 percent base rate on EU exports to the United States—the same level obtained by Japan—with exceptions for key sectors including aviation, timber, and spirits, excluding wine. It also included a commitment by the EU to increase purchases of American liquefied natural gas as part of a series of investment commitments.

The European side hoped for a compromise on steel that would allow imports of a certain amount into the United States, with the surplus being taxed at a 50 percent rate.

"The right offer is to open the EU market"

US Trade Secretary Howard Lutnick stated before the leaders' meeting that the EU wants and must reach an agreement with the US, but the question is whether it will offer a good enough deal and open the market.

"The question is whether they will make President Trump a good enough offer that will be profitable for him to drop the 30 percent tariffs that he himself set," Lutnick said in an interview with Fox News.

The Commerce Minister stated that the proper offer is to open the EU market, but added that Trump himself will decide whether the terms offered are good enough. Lutnick emphasized that Trump also negotiated the terms of the agreement with Japan and conducted them"masterfully." The Minister ruled out another extension of the negotiation deadline, but stated that Trump would still be open to talks after August 1, when the higher tariffs are scheduled to take effect.

One step away from retaliatory tariffs from the EU

The Financial Times reports that officials from both sides, even before the meeting between Trump and von der Leyen, held intense negotiations late into the night on Saturday. Tensions were high, with disagreements particularly over the level of tariffs that would apply to EU steel, automotive products, and pharmaceuticals. EU officials are also said to have been holding talks with their Japanese counterparts in recent days to better prepare for the negotiations.

However, the British daily points out that a growing number of EU member states have called on Brussels to launch already prepared retaliatory tariffs on American goods worth almost €100 billion if the talks fail. The value of EU-US trade relations in 2023 has been estimated at €1.6 trillion.

AFP reports that the EU is currently burdened with a 25 percent tariff on cars, a 50 percent tariff on steel and aluminum, and a general tariff of 10 percent. If the talks fail, EU countries have given the green light to impose tariffs on $109 billion (€93 billion) worth of American goods, including aircraft and cars. These tariffs will take effect gradually from August 7. Brussels is also preparing a list of American services that could potentially be subject to additional tariffs.

Trump has made agreements with Asian countries

On Wednesday, July 23, Trump announced that he had reached trade agreements with three Asian countries regarding lower tariffs. The agreements were reached with the Philippines, Japan, and Indonesia.

"We have just finalized a huge agreement with Japan, probably the largest in history. Japan will invest, at my command, $550 billion in the United States, which will receive 90% of the profits," Trump announced in a post on his social media site Truth Social. He estimated that thanks to the agreement, Japan would"open" its market to American cars, trucks and agricultural products.

The tariff on imported products from Japan is expected to be 15 percent, down from the 24 percent announced in April and the 25 percent announced in July. The president did not specify, however, the amount of Japanese tariffs on American imports. During a later appearance at a meeting with Republican congressmen, he revealed that part of the deal would include a joint venture investment in LNG fields in Alaska.

For Indonesia, tariffs have been reduced from 32 percent to 19 percent. In turn, the Philippines will waive tariffs on American goods, while tariffs on Philippine goods will be 19 percent.