Brussels – After almost a month, the agreement has been put in black and white. The “Scottish” understanding of 27 July between Ursula von der Leyen and Donald Trump over the tariffs the US president wanted to impose on the European Union is finally on paper, ready to become a legislative document.
The joint declaration details the new US tariff regime toward the EU, with a global maximum tariff rate of 15 percent for the vast majority of EU exports, including strategic sectors such as automobiles (currently at 27.5 pct), pharmaceuticals, semiconductors, and lumber. Wine and other food products will also be subject to the same regime. Sectors already subject to Most Favored Nation (MFN) tariff of 15 percent or above will not be subject to additional tariffs.
As far as cars and their components are concerned, the Commission explains in a note, the 15% US tariff ceiling will apply in tandem with the EU initiating the procedures for tariff reductions vis-à-vis US products.
The joint statement does not contain any commitments on EU digital regulation. “We have made it very clear to the US that changes to our digital regulations – the Digital Markets Act and the Digital Services Act – were not on the table,” the Commission said.
“The European Union will have significantly lower tariffs than other countries,” Maroš Šefčovič, the Trade Commissioner, emphasized at a press conference, underlining that the “alternative would have been a trade war with sky-high tariffs. Five million jobs in the EU would have been at risk. This agreement brings stability.”
Regarding the goal of giving companies certainties, which the Commission achieved, von der Leyen, in a post on X, insisted that the deal brought “predictability for our companies and consumers, stability in the world’s largest trade partnership.” Also, according to the president, there is now “security for European jobs and economic growth in the long term.” In essence, says von der Leyen, “this trade agreement between the EU and the United States is beneficial to our citizens and businesses and strengthens the transatlantic relationship.”
Here are the details of the agreement:
- Generalized application of a global tariff ceiling of 15 percent for EU products subject to reciprocal duties. No additional tariffs will be applied to products already subject to MFN (Most Favored Nation) tariffs of 15 percent or above.
- The US commitment to ensure that EU exports of pharmaceuticals, semiconductors, and lumber are included in the 15 percent tariff ceiling, once the results of the corresponding investigations are concluded.
- Commitment to apply the 15 percent all-inclusive tariff ceiling to cars and car parts as of the first day of the month in which the EU initiates procedures for the implementation of the tariff reductions agreed upon in the agreement.
- Exemptions from the 15 percent cap (the US commits to applying only MFN tariffs, which are effectively zero or close to zero) for the following EU products: non-available natural resources (including cork), all aircraft and aircraft parts, generic drugs and their ingredients and chemical precursors. The EU and the US will work to extend this list further in the future.
- The intention to work on common solutions to protect the EU and US economies from sources of overcapacity in the steel and aluminium sector and to work on secure supply chains, including through TRQ-based solutions.
- Mutual commitment to reduce non-tariff barriers, including through cooperation on standards and the simplification of SPS (sanitary and phytosanitary) certificates, and facilitating mutual recognition of conformity assessments to cover additional industry sectors.
- Cooperation on digital trade and a moratorium on customs duties in e-commerce
- Strengthening cooperation in the area of economic security, including cooperation on investment screening and export controls, and addressing non-market policies and practices.
- More supply chain resilience, cooperation on critical minerals, and transatlantic purchases, particularly of energy and artificial intelligence chips.
- Increased transatlantic private sector investment flows across a wide range of sectors.
- Recognition of the EU’s plans to substantially increase defense and military equipment procurement from the United States, reflecting the shared strategic priority of deepening transatlantic defense industrial cooperation, enhancing NATO interoperability, and ensuring that EU Member States are equipped with the most advanced and reliable defense technologies available.
European ‘free’ investment in the US
Then there is the matter of EU investments in the US. The agreement does not mention it, but there has been some encouragement from both Washington and Brussels, as the Commission does not deny that “stability and predictability are important drivers of investments. EU companies have expressed interest in investing at least USD 600 billion (around EUR 550 billion) in various sectors in the US by 2029, further increasing their already significant investment of EUR 2.4 trillion and reinforcing their position as the largest investor in the US.” And this is one of the demands Trump has always made. Brussels, however, does not read it in this light, but rather as an “announced investment target,” the estimate of which is “based entirely on the private investment intentions of EU companies. The total figure is based on extensive contacts and discussions with various business associations and companies,” they say at the Commission.
The text must become law
The joint declaration is a political agreement that will now need to be given a legal form. “To the extent that legal implementation is necessary on the EU side, it will be taken forward in accordance with the applicable EU procedures and consultation with Member States and the European Parliament,” the Commission explains.
English version by the Translation Service of Withub
