Brussels – The European Union and the United States finally reached a trade agreement that ends the tariff dispute. The deal confirms the framework from a few days ago, and, therefore, a single tariff of 15 percent on most traded goods, including cars, semiconductors, and pharmaceuticals. The President of the European Commission, Ursula von der Leyen, finally rejoiced. The extraordinary summit held in Scotland with US President Donald Trump defused a trade war that the EU had sought to avert. It rewarded the aggressive stance of the White House occupant, who also benefited from the European commitment to purchase $750 billion worth of US energy products.
Tariffs of 15 percent, also on cars. And a commitment to buy energy from the US
Under the terms of the agreement, the EU first and foremost secures the avoidance of the sweeping 30 percent tariffs that the US administration threatened to impose starting from August 1. After all, this was the primary objective of negotiations. In this sense, the EU can be satisfied. The EU also obtains from the agreement a reduction of tariffs on cars, a sector dear to Germany, reduced from 27.5 percent to the standardized 15 percent regime.
The US receives a three-year $750 billion commitment for the purchase of liquefied natural gas (LNG) and nuclear fuel, with annual purchases of $250 billion. IThe move is in response to American demands to buy more in the US, which the EU saw as an opportunity to reduce the limited Russian energy still flowing into Europe. The energy contracts will span across Trump’s entire presidential term. Ultimately, von der Leyen thanks Trump publicly. “He is a tough negotiator, but he also knows how to get deals done.”
What about the EU? From the Commission’s point of view, the agreement reached a few days before the expiry of the threatened tariff break is a success. “Certainly, 15% tariffs are a challenge for some, but we must not forget what we were risking: 30% tariffs,” Ursula von der Leyen said out loud, who, at the press conference called for the occasion on Sunday evening, celebrated and claimed the achieved result. Europe secures a negotiated agreement with the United States on tariffs for European exports. However, the outcome resulted from American pressure, to which the EU ultimately yielded by accepting lower tariffs on its exports than it would have otherwise faced.
Zero tariffs for some strategic products, alcoholic beverages are excluded
The EU executive is trying to promote the idea that the deal concluded is “the biggest trade agreement ever,” even though for the EU it still means increased tariffs, when the agreements serve to reduce them, if not eliminate them, and binding investment commitments in the United States. Moreover, excluded from the deal are alcoholic beverages, to be revisited in the coming days, as well as the steel sector, which was never part of the current negotiations. For steel and aluminium, a quota system will remain, beyond which 50 percent tariffs will be triggered. However, von der Leyen stands firm: “Today’s agreement creates certainty in uncertain times. It ensures stability and predictability for citizens and businesses on both sides of the Atlantic.”
Moreover, it can claim a zero-for-zero tariff agreement on several strategic products, such as aircraft and related components, certain chemicals, generic drugs, semiconductor equipment, some agricultural products, natural resources, and essential raw materials. This is the formula behind the 15 percent plus exemptions scheme.
Single market open to SUVs and US agricultural products
To avoid a trade war, however, the EU had to make significant concessions to its American counterpart. The EU lowered trade barriers for US vehicles, something that Trump, not surprisingly, was very pleased about. “We have some models that are doing very well, we do really good business with pickups, with SUVs,” the US president punctuates in another press conference, different from von der Leyen’s. “I think the European people will have some diversification – I think that will make them happy,” he adds, emphasizing that he believes this will be the US sector that will grow the most. Similar scenario for agriculture. “It’s a good deal for everybody,” US President Donald Trump sounded off in a different press conference from von der Leyen. “It will bring us closer … It’s a partnership, in a way.” Europe wanted it.
English version by the Translation Service of Withub
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