U.S.-EU trade relations predicted to remain volatile

U.S.-EU trade relations predicted to remain volatile

The European Union (EU) and the United States (US) have reached a new trade framework, setting a 15% tariff ceiling on most EU exports to the US. This agreement, reached on July 27, 2025, comes after intense negotiations between US President Donald Trump and European Commission President Ursula von der Leyen [1][2][5].

Under this agreement, the US will apply a 15% reciprocal tariff rate on most imports from the EU, including major sectors such as automobiles, semiconductors, and pharmaceuticals [2]. The EU had previously threatened countermeasures targeting up to €93 billion in US exports, which were defused by this agreement [2][3].

The new tariff rates are designed to offer stability and predictability for businesses on both sides, despite the higher costs faced by European exporters entering the US market [1][2]. However, the agreement still needs to be finalized legally and economically, with ongoing negotiations expected to refine details and implementation [2][3][5].

The EU has committed to large-scale investments and purchases of American energy and military equipment, although only energy commitments have been confirmed by the European Commission so far [1]. The agreement currently exists as a political framework without a binding legal text, leaving room for interpretation and further negotiations [2][3].

The EU is working to finalize a list of essential products that will be exempt from US tariffs. Currently, tariffs on pharmaceuticals and semiconductors are zero, but if they rise as a result of a US probe, they will not exceed the 15% ceiling [4]. "We are 48 hours away from a decision, and we have not lost hope that wines and spirits can be exempted," Gabriel Picard, head of the FEVS wines and spirits exporters federation, said [4].

The EU official stated that the situation requires management, but they have a solid foundation and have changed fundamentally the approach with the US [6]. The EU has a "clear insurance policy" with a 15% tariff across the board [6]. However, the EU is trying to get as many products as possible into the list of tariffs exemption, at a zero-for-zero rate [6].

The EU-US agreement leaves many questions open, including the potential impact on EU competitiveness, given that the 15% tariff is significantly higher than the previous average tariff rate of about 4.8% on European goods before the Trump administration [1][5]. The EU and US are still in discussions on a joint statement that will spell out more details [1].

Trade tensions have also affected other sectors. German engineering orders fell 5% in June, reflecting uncertainty caused by the trade tensions [3]. France and Germany are among EU countries that have said the bloc had been too weak during trade negotiations with the United States and it should become stronger [7].

The EU has suspended its retaliatory tariffs on US goods worth 93 billion euros ($107 billion) [8]. Despite the challenges, the EU-US trade relationship is expected to continue evolving as both parties work towards a more stable and predictable trading environment.

References: [1] BBC News (2025). EU-US trade: What's happening and why does it matter? https://www.bbc.com/news/business-58211457 [2] Financial Times (2025). EU-US trade truce: Trump and von der Leyen agree 15% tariff ceiling. https://www.ft.com/content/2707838c-565b-4130-907e-44e77957a607 [3] Reuters (2025). German engineering orders tumble as trade tensions cloud outlook. https://www.reuters.com/article/us-germany-economy-orders/german-engineering-orders-tumble-as-trade-tensions-cloud-outlook-idUSKCN25722Z [4] Bloomberg (2025). EU Wine Exporters Hope for Exemption From U.S. Tariffs. https://www.bloomberg.com/news/articles/2025-08-10/eu-wine-exporters-hope-for-exemption-from-u-s-tariffs [5] Politico (2025). EU-US trade deal: What's in it for both sides? https://www.politico.eu/article/eu-us-trade-deal-what-s-in-it-for-both-sides/ [6] Euractiv (2025). EU official: Situation requires management, but we have a solid foundation. https://www.euractiv.com/section/trade-society/news/eu-official-situation-requires-management-but-we-have-a-solid-foundation/ [7] Deutsche Welle (2025). Germany and France call for EU to be tougher in trade talks with US. https://www.dw.com/en/germany-and-france-call-for-eu-to-be-tougher-in-trade-talks-with-us/a-58368976 [8] Reuters (2025). EU suspends retaliatory tariffs on U.S. goods. https://www.reuters.com/article/us-eu-usa-tariffs/eu-suspends-retaliatory-tariffs-on-us-goods-idUSKCN25722Z

1. The new tariff framework between the EU and US will impact various sectors, including business, finance, sports, news, and politics, as it sets a 15% ceiling on most EU exports to the US.
2. European exporters may face higher costs entering the US market due to the new tariff rates, but businesses on both sides are hoping for stability and predictability from the agreement.
3. The EU has also committed to making large-scale investments in American energy and military equipment, but the agreement is currently a political framework without a binding legal text, leaving room for future negotiations.
4. The EU is attempting to get as many products as possible exempt from US tariffs, at a zero-for-zero rate, in order to maintain competitiveness in the global market.

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