US, EU Strike Last-Minute Trade Deal, Averting Transatlantic Tariff War

The United States and the European Union have reached a sweeping new trade agreement just days before a looming deadline that threatened to escalate into a full-blown trade war.

The deal, struck during a private meeting on Sunday between US President Donald Trump and European Commission President Ursula von der Leyen at Trump’s Turnberry golf resort in Scotland,  imposes a 15% tariff on most European exports to the US. In return, the EU will increase purchases of American energy, military equipment, and other goods.

Trump touted the deal as the “biggest ever made,” calling the talks “very interesting” and predicting the agreement would benefit both sides. Von der Leyen, speaking alongside him, said the deal would “bring stability” and “predictability” — a clear effort to ease months of escalating tensions between Washington and Brussels.

Before Sunday’s breakthrough, the US was preparing to slap 30% tariffs on EU goods starting August 1. European carmakers in particular had faced a painful 25% duty since April, which the new deal rolls back to a unified 15% tariff rate.

Some sectors emerged unscathed — airplane components, semiconductor equipment, agricultural products, and certain chemicals will be exempt from the new duties. But overall, the EU economy will still absorb a substantial blow from the broad tariff regime, albeit less severe than expected.

According to Trump, the EU has also committed to purchasing $750 billion worth of American energy, boosting US-bound investment by $600 billion, and placing major orders for American military gear.

“The opening up of all the European countries,” Trump said Sunday, “that’s what we’ve achieved.”

The agreement covers the EU’s entire trade relationship with the US — the two largest economic zones in the world, with nearly $2 trillion in trade last year alone.

Still, not everyone is convinced. Carsten Brzeski, global macro chief at ING Research, noted the absence of written terms:

“The big caveat to today’s deal is that there is nothing on paper, yet.”

European and American officials have spent months in increasingly combative negotiations, with Trump frequently accusing Brussels of taking advantage of the US through “very one-sided” arrangements.

Von der Leyen acknowledged Trump’s tough reputation as a negotiator — “But fair,” he quickly interjected.

With input from Al Jazeera