Both sides announced this following a top-level meeting between EU Commission President Ursula von der Leyen and US President Donald Trump in Scotland. According to Trump, the tariff rate on most imports will be 15 percent, including for the automotive industry.
"It will be the biggest deal of all," Trump said during the announcement of the agreement. Von der Leyen said it had been a difficult process."Now we have it, and that's good." The EU will agree to buy $750 billion worth of energy from the US and invest an additional $600 billion in the US, the US president said.
Tariffs on steel remain at 50 percent
He described the energy agreement as a"very important component" of the deal. Tariffs on steel and aluminum imports will remain at 50 percent as before."This is a global issue that will remain as it is," he emphasized.
It was already clear in advance that imports from the EU to the US would be subject to significantly higher tariffs than before Trump's second term began. The EU's goal in the negotiations had been to stay well below the 30 percent tariff rate recently announced by Trump. Von der Leyen had said shortly before the talks that Trump was a tough but fair negotiator.
EU feared trade war
If the EU hadn't entered into the deal, a further escalation of the trade dispute would have threatened. Trump wanted to impose additional tariffs starting August 1 if the EU didn't accommodate him on trade issues. The Republican justified his policy primarily by arguing that he wanted to correct alleged trade imbalances and relocate production to his homeland—in keeping with the"America First" motto.
At the same time, customs revenues are intended to at least partially finance his expensive election promise of major tax cuts. The EU Commission, however, considers the tariffs unjustified and doubts their compatibility with the rules of the World Trade Organization (WTO).
Germany demanded a quick deal
The fact that the EU is now accepting a compromise is due to the fact that many member states consider the risks of an escalation of the trade dispute to be more significant than higher tariffs. For example, German Chancellor Friedrich Merz (CDU) has repeatedly called for a quick agreement:"Better quick and easy than lengthy and complicated, with months of negotiations still in progress," he said.
Another factor was that the automotive sector, as well as the steel and aluminum industries, had already suffered from high tariffs in recent months. The EU's negotiating position was also weakened by Europe's dependence on US military capabilities. There were fears that if the trade dispute escalated, Trump could once again question the NATO pledge of assistance. Given the threats posed by Russia, this was seen as a major risk, especially in eastern EU states.
EU threatened retaliatory tariffs
In the economic sphere, however, the EU could have exerted considerable pressure on the US with retaliatory tariffs. During the negotiations, the EU Commission threatened, among other things, additional duties on imports of industrial and agricultural goods such as aircraft, motorcycles, beef, whiskey, and citrus fruits.
In addition, EU export restrictions on certain products worth €4.4 billion were considered. These include steel scrap and chemical products, which US companies have previously been importing frequently.
