Trump, EU reach contours of trade deal with 15% tariffs

US President Donald Trump on Sunday touted a trade agreement with the European Union, following months of contentious negotiations with one of the United States’ top trading partners.

Trump said he would impose a 15% duty on most imports from the European Union, about half of his latest threat of 30 percent in levies. The White House did not immediately release specific details of the trade agreement, which are traditionally hundreds of pages long and take years to negotiate.

“It’s great that we made a deal today instead of playing games and maybe not making a deal at all,” Trump said.

Trump and European Commission President Ursula von der Leyen announced the outlines of the deal Sunday at Trump Turnberry, one of several golf courses that the president owns in Scotland.

Both sought to paint the accord as “the biggest deal ever made,” but it was unclear if they were on the same page about how steel and other critical products would be affected. The agreement is likely to become a road map for further, more detailed talks.

From the end of World War II until Trump’s 2016 election, the United States largely designed trade agreements to lower the cost of trading with other countries, often through eliminating tariffs.

Trump’s protectionist trade strategy stands to reverse decades of U.S. globalization efforts in ways that could increase the prices of many goods for American customers. U.S. importers pay these import fees, and those costs are often passed on to the businesses and consumers who buy them.

Leaders from around the world are rushing to strike trade agreements with Trump ahead of an Aug. 1 deadline, when the White House has pledged to begin collecting new fees on imports from dozens of countries.

With few details made public, many trade specialists were reluctant to comment on the announced arrangement between the U.S. and E.U. Some noted that earlier presidential announcements of “trade deals” have actually referred to skeleton agreements that require additional negotiations to finalise.

“Is this really a trade deal?” asked Lori Wallach, director of the Rethink Trade initiative, which generally supports the president’s aim of shrinking the trade deficit.

The White House has announced several recent trade announcements with great fanfare, only to have questions emerge in subsequent days about exactly what had been agreed with countries such as Japan and Vietnam. The White House said it reached a “historic” agreement with the United Kingdom in May, but months later, UK Prime Minister Keir Starmer is expected to meet with Trump on Monday to hammer out the particulars.

For the EU, a 15 percent blanket tariff is far worse than what European officials had previously hoped for and significantly higher than pre-Trump levels. But the bloc has sought to avoid an all-out trade war with its traditionally closest commercial and military ally.

The contours of the deal do not include additional EU tariffs on US goods. The bloc - which acts as a single market on trade - has held fire on a retaliation for months to allow for a deal, even as policymakers prepared a sweeping list of more than $100 billion (R1.8 trillion) worth of US goods that it could hit with its own tariffs if talks collapsed.

Washington also let go of some grievances it was adamant would be necessary to address. The administration had pressed the EU for concessions on tech industry regulations and food standards, which EU officials insisted were nonnegotiable. After months of uncertainty, EU officials say they wanted a pact that gives key industries some stability.

“Today, with this deal, we are creating more predictability for our businesses. In these turbulent times, this is necessary for our companies to be able to plan and to invest,” Von der Leyen told reporters after the announcement. “We are ensuring immediate tariff relief.”

The Trump administration has struck a handful of trade frameworks, but deals with large economies have proven more time-intensive than the administration anticipated. In April, a top Trump trade adviser predicted that the White House would make “90 deals in 90 days.”

This month, Trump extended the tariff deadline to Aug. 1 and began sending letters to dictate new tariff rates to many of the countries that did not yet have a deal.

Under the agreement announced Sunday, Trump said the European Union agrees to purchase $750 billion in energy and invest more in the United States. The levies on cars will also be 15%, down from the existing 25%. The EU will also increase its purchases of US military equipment, Trump said.

Von der Leyen said the 15% levy would apply to the “vast majority” of EU exports, including cars, and that there would be no stacking of additional tariffs. She said the two sides had agreed to eliminate tariffs on “strategic products” such as aircraft parts, some agricultural products and chemicals - “and we will keep working to add more products to this list.”

During negotiations, the European Union has tried to secure exemptions from the US tariff regime for key sectors such as booze and aircraft. Von der Leyen said Sunday’s agreement provides a “framework,” but that “details will have to be sorted out” in the coming weeks, including a decision on spirits and wine.

On steel, Trump had indicated that a 50% tariff would remain in place, describing it as a “worldwide thing that stays the way it is.” Von der Leyen, meanwhile, suggested steel tariffs would be cut in further talks on establishing a quota system.

Pharmaceuticals were the bloc’s top export to the United States last year, and the Trump administration is expected to impose new levies on prescription drugs. Trump said the pharmaceutical tariffs are “unrelated to this deal.” But von der Leyen later said the EU’s understanding was that pharmaceuticals coming from the bloc would only be tariffed at 15%, as with other goods.

Trump frequently complains about the yawning gap in US-E.U. merchandise trade. Last year, the US imported almost $606bn worth of European products while selling goods totaling about $370bn to European buyers. The resulting $236bn trade deficit is evidence of European unfairness, Trump insists.

But the US runs a sizable surplus of its own in trade in services - like financial advice, tourism and education - bringing the total trade relationship much closer to balance. Considering the total $1.8 trillion in goods and services that flow between the US and EU, the U.S. trade deficit is less than $100 billion, which most economists say is inconsequential.

Cutting tariffs on European automobile exports has been a sticking point in the negotiations, particularly for Germany, which is the biggest EU exporter of goods to the United States.

Trump said the EU would lift barriers for American companies and suggested that Europeans would enjoy American SUVs and pickup trucks. The EU has a 10%  tariff on imported automobiles, which applies to US vehicles.

Analysts say that regardless of tariffs and EU regulations, the US is unlikely to find more sales for its vehicles on a continent with small roads and little interest in big American cars.

Ahead of the meeting with von der Leyen, Trump told reporters he was not in a good mood and said there were about four sticking points holding up talks with the 27-nation bloc. But von der Leyen sought to appeal to his vision of himself as dealmaker, telling Trump they had the opportunity to strike the “biggest deal each of us has ever struck.”

She painted the negotiations as a success in her appearance at Trump Turnberry, calling it a “good deal” and a “huge deal.” But shortly after, during another news conference, she called the tariff on cars “the best we could get.”

WASHINGTON POST