EU–US Trade Agreement: Key Details, What’s Next, and Mixed Reactions Across Europe

The European Union and the United States have reached a new trade agreement aimed at averting steep tariffs that could have strained transatlantic relations. While leaders on both sides have framed the deal as a win, reactions across Europe remain divided.

What’s Been Agreed?

The agreement, reached just before an August 1st deadline, imposes a flat 15 percent tariff on most EU goods exported to the US—a measure that prevents the previously threatened 30 percent levy. The new rate brings the EU in line with similar terms secured by Japan and will come as a relief to many sectors, notably automotive, which supports roughly 13 million jobs across the bloc.

While 15 percent is significantly higher than the average pre-existing US tariff of 4.8 percent on EU products, it marks a reduction from the punitive rates introduced under the Trump administration. German carmakers, previously hit with 25 percent tariffs, will now face the uniform 15 percent rate, plus the original 2.5 percent auto import duty. Though still a burden, trade experts consider the new rate “manageable” for the industry.

In exchange, the EU has committed to purchasing $750 billion worth of American energy, including liquefied natural gas, crude oil, and nuclear materials, over three years. The bloc will also invest an additional $600 billion in the US economy and increase purchases of US military equipment, aligning with NATO defense spending goals.

Tariff Exemptions and Sector-Specific Adjustments

Some sensitive sectors will benefit from tariff exemptions, according to EU Commission President Ursula von der Leyen. These include aerospace, certain chemicals, semiconductor equipment, and select agricultural products. Pharmaceutical exports from the EU, particularly important for countries like Ireland, were also shielded from the most severe proposed penalties.

Steel exports, currently subject to 50 percent US tariffs, will be allowed under a quota system, meaning only quantities above a certain threshold will face the higher rate. The details of this mechanism are still under discussion.

What Comes Next?

The agreement must now be reviewed and approved by EU member states. National ambassadors convened the Monday after the deal’s announcement to receive a briefing from the European Commission.

Described as a “framework deal,” further technical negotiations are expected over the coming weeks. Among the unresolved points is how alcoholic beverages will be treated—France and the Netherlands have pushed for exceptions for wine and beer, respectively.

Mixed Reactions Across Europe

The response within the EU has been far from unified. France’s Prime Minister François Bayrou strongly criticised the agreement, calling it a “dark day” and likening the deal to an act of “submission” rather than partnership.

In contrast, Italian Prime Minister Giorgia Meloni welcomed the outcome, crediting the agreement with avoiding a full-blown “trade war within the West.” She had previously warned of severe economic consequences if tensions escalated further.

German Chancellor Friedrich Merz also endorsed the deal, saying it helped de-escalate trade tensions and preserve Europe’s core interests—though he noted he would have preferred a broader easing of restrictions.