EU-US Trade Accord July 2025 Premium

Brussels,

EU–US Trade Accord: A Fragile Truce in a Weaponized Economy

While dozens of U.S. partners face new tariffs, Brussels and Washington strike a controversial pact combining defense and energy purchases with limited tariff exemptions—highlighting growing tensions in global trade governance.

On August 1, 2025, the United States enacted a sweeping new tariff regime targeting over 68 countries, including EU member states. In parallel, European Commission President Ursula von der Leyen and U.S. President Donald Trump reportedly reached a political accord involving new U.S. tariffs on selected EU products, in exchange for a European commitment to purchase American defense equipment and hydrocarbons valued at $750 billion. The agreement, although not yet officially disclosed in full, is said to remain in effect until the end of the current U.S. presidential term in 2027.

By eEuropa

6 MINUTES READ

This article is based on our technical note – get it below

Brussels, 1st August 2025 - The handshake between European Commission President Ursula von der Leyen and U.S. President Donald Trump on 27 July 2025 in Turnberry produced the first comprehensive EU–U.S. trade deal in almost a decade.

The pact introduces a flat 15 % duty on roughly 70 % of EU exports to the United States, replacing the 30 % hike Washington had threatened for 1 August. Tariffs on steel and aluminium remain at 50 % under Section 232. In return, Brussels pledges larger purchases of U.S. LNG and defence equipment and wider market access in sensitive areas, from aerospace parts to fertilisers.

“It’s the best outcome in a hostile context—it prevents a tariff shock that would have cost jobs across Europe,” said Commission Vice-President Maroš Šefčovič. Von der Leyen added that “Europe’s market stays open, but predictability had to be restored.”

As of August 1, 2025, the Biden administration‑turned Trump government has put into force sweeping new “reciprocal” tariffs, imposing rates of 10 % to 41 % across 68–69 countries, including the EU, Canada, India, Taiwan and South Africa.

India faces a flat 25 % tariff on exports—covering smartphones, apparel, auto‑parts, and jewellery—while Canada and Switzerland are subject to 35 % and 39 % respectively, triggering significant diplomatic fallout.

The immediate market reaction was sharp: European indices such as the DAX and CAC‑40 dropped by over 1 %, Asian equities retreated, and the U.S. dollar weakened amid increased trade tension and inflation fears

EU Leaders’ Reactions – a Split Europe

France
PM François Bayrou - Called the deal “a dark day” and demanded activation of the EU anti-coercion tool.

Italy
PM Giorgia Meloni - Welcomed the truce but insisted on safeguards for vulnerable sectors.

Germany
Chancellor Friedrich Merz - Economy Min. Katharina ReicheMerz warned that the tariffs would inflict considerable damage on Germany’s economy. Reiche described the 15 % duty as “a competitiveness challenge, yet it brings certainty.”

Spain
PM Pedro Sánchez - Supports the pact “without enthusiasm,” urging faster EU strategic autonomy.
FinlandPM Petteri OrpoWelcomes the “clarity for business” and advocates phased tariff roll-backs.

Still on the Table

Steel & Aluminium: A Global Arrangement on Sustainable Steel & Aluminium (GASSA) is to be negotiated separately.
Critical Minerals Agreement (CMA): Talks continue so EU-sourced battery materials can qualify for U.S. IRA tax credits.
Strategic Tech: The 6th EU-U.S. Trade & Technology Council (Leuven, 4-5 Apr 2025) launched joint projects on AI, semiconductors and 6G.

Dowload the complete analysis

A sector-by-sector tariff breakdown, HS codes, and a timeline of ongoing negotiations are available in the Strategic eBriefing “EU-US Trade Negotiations 2025” (PDF, 11 pp.).