President Donald Trump announced a trade agreement with the European Union (E.U.) on Sunday, reducing tariffs to 15% and ending months of trade uncertainty. This new tariff rate marks a decrease from the 30% tariffs Trump threatened in July and the 20% proposed in April. During the announcement, Trump stated that the E.U. would not impose any tariffs on U.S. imports, calling the agreement “satisfactory to both sides.” European Commission President Ursula von der Leyen affirmed that the pact would provide stability and predictability for businesses on both sides of the Atlantic.
This agreement closely resembles a previous trade deal with Japan, which also established a 15% import duty. Notably, the average U.S. tariff on imports from the E.U. in the prior year was merely 1.2%. Negotiations had intensified before the announcement, with the E.U. believing it was close to an agreement when Trump abruptly threatened higher tariffs. Von der Leyen warned that imposing 30% tariffs could disrupt vital transatlantic supply chains.
Upon receiving Trump’s letter, the E.U. committed to finalizing an agreement by August 1 while preparing a list of U.S. goods for potential retaliatory tariffs, such as Boeing aircraft and Kentucky bourbon. Agricultural and business groups expressed concern that high tariffs could dramatically affect the pricing and availability of imports. The 27 E.U. nations are the United States’ largest trading partner, with imports valued at $605 billion, significantly outpacing trade with Mexico and China. Additionally, Trump has threatened a 200% tariff on U.S. drug imports, which raises questions about whether this new deal would mitigate such future actions.
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