The United States and the European Union have struck a 15% trade deal to avoid a full-blown transatlantic trade war, just days ahead of an August 1 deadline for imposing steep tariffs. It occurred on Sunday, following a private meeting between US President Donald Trump and European Commission President Ursula von der Leyen in Scotland. During a press conference at his Turnberry resort with reporters, Trump stated that the negotiation was an exciting one and that it would be beneficial for both parties. He hailed the pact as the biggest deal ever made.
Von der Leyen expressed that the deal would bring certainty and stability in the region, which is very crucial for businesses on both sides of the Atlantic. The deal was struck a few days before the US was planning to impose a 30% tariff on EU imports, and it is the most significant of Trump’s trade deals announced to date.
The US-EU agreement followed preliminary deals with the United Kingdom, Vietnam, Japan, and the Philippines, as well as a 90-day trade pact with China. The European Union is the United States’ largest trading partner, with two-way trade in services and goods reaching approximately $2 trillion in 2024.
US Goods Trade with the European Union
As of May 2025, the US imported goods worth $303.4 billion from the EU and exported goods worth $166 billion, resulting in a trade deficit of $137 billion. The pact states that a 15% tariff will be slapped on all European exports, including automobiles. The baseline rate serves as an absolute benchmark for the European auto industry, which has been subject to a 25% tariff in addition to a pre-existing 2.5% levy since April.
Under the deal, certain goods, including semiconductors, agricultural products, semiconductor equipment, and plane parts, will be fully exempt from tariffs. President Trump stated that the European Union also agreed to acquire approximately $750 billion worth of US energy, alongside boosting overall investment in America by $600 billion and placing a substantial order for military equipment. The US president said that they have opened their doors for trade with all European nations. Until now, the officials shared only limited details about the agreement.
Carsten Brzeski, Global Head of Macro at ING Research, stated that a significant threat to the trade deal is the lack of a written agreement. Furthermore, he added that the upcoming time will hopefully bring more clarity.
The breakthrough follows several months of tense back-and-forth exchanges between the US president and EU officials. Previously, Trump has long accused the European Union of unfair trade practices. Just before the trade talks began, he called the existing arrangements a one-sided transaction, considering them very unfair to the US.
Yesterday, von der Leyen quoted the joint economic might of the US and Europe, stating that their trade encompasses hundreds of millions of people and trillions of dollars. She also acknowledged the US president’s formidable reputation as a negotiator, with which he responded: “But fair.”
The Agreement Averted Trade Conflict
Earlier this month, the dialogue seemed close to collapse when President Trump threatened to proceed with the 30% tariff uncles the European Union matched the 15% rate he recently settled with Japan. In case of the likelihood that both sides could fail to break a deal, Brussels had ready a long list of retaliatory tariffs targeting everything from beer to beef, car parts, and Boeing aircraft.
The agreement has been welcomed by German Chancellor Friedrich Merz, who stated that this deal has successfully prevented a trade conflict that would have severely impacted the export-oriented German economy. Merz noted that it applies to the automobile industry, where the present tariffs of 27.5% will be reduced to approximately 15%.
