EU-US tariff deal not finished yet, say Europeans unhappy with Trump’s terms

It was all handshakes and smiles when European Commission chief Ursula von der Leyen and US President Donald Trump announced that a EU-US trade agreement had been reached after months of wrangling – beating Trump’s deadline of 1 August to make a deal.

Many across Europe breathed a sigh of relief that European negotiators had avoided 30% tariffs threatened by Trump months ago. Other countries are still racing to finalise deals with the US to avoid sweeping levies.

But since news of the US-EU deal was announced last weekend, not only has criticism mounted, but it has become clear many details are yet to be ironed out, there are several discrepancies between the two sides and some EU countries will be disproportionately affected.

Few European leaders rejoiced at the announcement that a 15% tariff would be applied on most EU exports to the US – an improvement on the 30% tariff initially threatened by Trump, but still a substantial hike from the former 4.8% average rate.

Yet, while expressing regret that the EU had not adopted a tougher negotiating stance, many begrudgingly agreed the deal had at least brought a semblance of certainty and predictability to Europe’s businesses after a number of fraught months.

“I would have wished for a different outcome,” Germany’s finance minister Lars Klingbeil said. “Still, all in all, it is good that there is an agreement with the US, that there are no further escalations.”

As of Thursday, a joint statement had yet to be released, although the Commission has emphasised it will not be a legally binding document but a “set of political commitments”.

“From there will flow the additional negotiated exemptions that we’re looking to bake into our agreement with the US,” Commission trade spokesperson Olof Gill said.

The Commission’s general outline of the deal stressed it was not legally binding.

The White House fact sheet on the agreement presents none of these caveats and says it achieves “historic structural reforms”, but US Commerce chief Howard Lutnick admitted on Wednesday that talks would continue and that EU and US officials were still discussing some aspects of the framework.

“This isn’t the end of the story and we won’t leave it at that,” French President Emmanuel Macron said. “It’s the first step in a negotiation process that will continue.”

Trade agreements usually take between 18 and 24 months of bilateral negotiations, says Cinzia Alcidi of the Centre for European Policy Studies in Brussels. “To give some certainty to the industry and private sectors now, the 15% blanket tariff will apply – but then there will be efforts to get some goods a different deal,” she says.

According to the White House, pharmaceuticals and semiconductors will fall under the 15% tariff, with no mention of that number being the upper limit.

But the EU says the two sectors will remain on the current 0% rate for now and until new global tariff rates are agreed. Any future tariffs, according to the EU, will be capped at 15%.

Tariffs on steel and aluminium, according to the US, will remain at 50%. The EU says Brussels and Washington will work to cut that number and that they will be replaced by a quota system to come beyond 1 August.

Some of the most glaring discrepancies can be found in the language used by the two sides to describe the EU’s investment commitments.

Where the US statement says the EU “will” purchase $750bn (£568bn) in US oil, liquefied natural gas (LNG) and nuclear energy products, the EU says only that it “intends” to do so as it weans itself off Russian gas and oil.

Not only is it unclear whether the US can even provide such amounts to the EU, says Cinzia Alcidi, but the EU cannot decide purchases on behalf of the private sector.

Similarly, the US says the EU will invest $600bn by the end of Trump’s second term – but the EU states simply that “companies have expressed interest” in investing that sum by 2029. As Brussels cannot force private firms to invest in the US, there is technically no guarantee that amount can or will be reached.

According to the US, the EU has “agreed to purchase significant amounts” of US military equipment. There is no mention of this in the EU statement.

Nearly 80% of the EU’s defence investment already goes to the US, and scaling up further may not be possible; besides, such a commitment would be at odds with von der Leyen’s recent ReArm Europe plan, which calls for investments in Europe’s domestic defence industry.

And while negotiations continue, the US will also apply a 15% tariff on wine and spirits, the Commission said on Thursday, adding it would continue to try and achieve a carve-out.

On Wednesday, Macron said the agreement had the merit of offering “predictability in the short term” – but also called for Europe to be firmer with the US.

“In order to be free you have to be feared. We weren’t feared enough,” he said.

Given the amount of detail that still needs hammering out, the next phase of negotiations is set to continue for some time – and after the backlash the Commission received this week, European negotiators may feel under greater pressure to stand their ground.

Although the 15% tariffs will hit all European countries, they will affect them in different ways.

Germany, Ireland and Italy are particularly exposed due to the nature of their partnerships with the US. For Germany’s carmakers, the US represents 13% of their exports worth €34bn (£29bn). Hildegard Müller, president of the German Association of the Automotive Industry, said the new tariffs would be a costly burden.

Among EU countries, Ireland is the most reliant on the US as an export market. In particular it manufactures and exports pharmaceuticals worth $50bn a year – so Dublin welcomed the EU-US agreement through gritted teeth. “It is what it is and we move on,” said Neale Richmond, a minister of state in Ireland’s foreign affairs department.

Italy’s agricultural, pharmaceutical and automotive sectors will also suffer and the country’s gross domestic product (GDP) could take a 0.2% hit as a result of the 15% levy, according to the Italian Institute of International Political Studies.

Cristiano Fini of the Italian Confederation of Farmers said the deal with the US felt more like “a surrender” than an agreement. Several Italian trade associations are now already clamouring for compensation from the EU to make up for the predicted losses.

But that is exactly what the EU needs to resist, says Cinzia Alcidi.

Blanket compensation for EU exporters would end up costing taxpayers, she believes, “and that would constitute a great victory for Trump because it would mean that, ultimately, Europeans are paying the price of his tariffs”.