Trump and von der Leyen announce US-EU trade deal

Trump and von der Leyen announce US-EU trade deal

Agreement includes 15% baseline tariff for most EU exports to US after deal reached at Scotland crunch talks

Donald Trump has announced a deal with the EU to end four months of difficult negotiations between Washington and Brussels and avert a damaging transatlantic trade war, imposing a 15% import tariff on most EU goods – half the threatened rate.

European Commission chief Ursula von der Leyen said "we have a deal" after a 40-minute meeting with Trump at his Turnberry golf resort in Scotland, where the US president is vacationing over the weekend. She described it as "a great deal, a huge deal" that would bring "stability" and "predictability" to both sides. "The two largest economies should have good trade flowing," she said. "It solves a lot of things and it was a great decision," Trump said, describing the agreement, which also involved the EU agreeing to spend tens of billions of dollars more on US energy products, as "a powerful deal" and an "important" partnership.

“This is truly the largest trade partnership in the world, so we should try,” he had said before the private meeting began. Keeping the EU delegation, which had arrived for the meeting on Sunday, on tenterhooks until the very end, the US president had repeated less than an hour earlier that the chances of an agreement were only 50/50 and that three or four sticking points remained. Von der Leyen described the meeting as “tough” and “very difficult.” Referring to a previous meeting with Trump on camera, she later told reporters at Glasgow Airport: “You saw the tension at the beginning. So we had to work hard to reach a common position.”

Under the agreement, the US will apply a base tariff of 15% to most EU exports to the US, limiting a higher tariff. However, the rate is higher than before Trump came to power, and a 50% tariff on steel exports remains in place, a setback for that industry. There was initial confusion regarding pharmaceuticals after Trump announced the sector would not be included. Speaking to reporters at Glasgow Prestwick Airport shortly afterward, von der Leyen stated that they were included, but that there were no guarantees of subsequent increases in import tariffs.

“It was agreed that we will have 15% for pharmaceuticals. Regardless of the subsequent decisions of the US president: how do we address pharmaceuticals in general? Globally, that is a separate issue,” he stated. He also revealed that zero tariffs will apply to other sectors, including “all aircraft and their components, certain chemical products, certain generics, semiconductor equipment, certain agricultural products, natural resources, and essential raw materials.” German Chancellor Friedrich Merz welcomed the agreement, saying it avoided a trade conflict that would have severely affected Germany’s export-driven economy and its important automotive sector. German carmakers VW, Mercedes, and BMW were among the hardest hit by the current 27.5% US tariff on car and parts imports.

Italian Prime Minister Giorgia Meloni said it was "positive" that a trade deal had been reached, but added that she needed to see the details. Italy is one of Europe's largest exporters to the United States, with a trade surplus of more than €40 billion. In a statement, Meloni said the agreement "guarantees stability." Under the terms of the deal, Brussels commits to buying $750 billion (£560 billion) of oil, gas, nuclear fuel, and semiconductors, including liquefied gas, over three years, while also pledging to invest $600 billion (£446 billion) in the United States, a deal that includes the purchase of military equipment.

However, Trump retains the ability to raise tariffs in the future if European countries fail to meet their investment commitments, a senior US administration official told reporters late Sunday. The deal stabilizes €1.4 trillion in trade between the EU and the US and avoids a 30% tariff rate that Trump threatened to impose on August 1 if talks failed. Speaking on a plane back to Brussels, EU Trade Commissioner Maroš Šefčovič said Trump was "a very tough negotiator" and that the "atmosphere was very intense."

He admitted that 15% was a worse position for the EU than before Trump, when tariff rates averaged 4.8%, marking a significant victory for Trump's tariff threat tactics. "I think the most important thing for us was to make sure we would have this predictability and that we would have stability for our businesses," Šefčovič said. The deal also creates a divide on the island of Ireland, as Northern Ireland traders can sell to the US at a 10% tariff rate, setting the stage for difficult diplomatic talks over guarantees to maintain island-wide stability in the Good Friday agreement.

Ireland's Deputy Prime Minister Simon Harris said he regretted the 15% tariff rate, but that certainty was important. "There are still many details of the agreement that will need to be presented, including those related to the pharmaceutical, aviation, and other sectors. In the coming days, we will examine what has been agreed and its full implications for Irish businesses and the economy, including any impact on the all-island economy," he said. There was also confusion over the tariff rate applicable to steel. While Trump indicated that his punitive 50% rate would continue to apply as part of "a global measure that will remain as is," von der Leyen told reporters that a quota system would be implemented.

The UK steel industry still faces tariffs of 25%, despite Trump's initial promise that they would be reduced to zero. More concessions are expected when Trump meets with Keir Starmer, the British prime minister, in Scotland on Monday. The agreement reached in Scotland is likely to be greeted with relief by financial markets when they open on Monday, following a turbulent few months with investors nervous about the prospect that Trump's tariff wars could hit the global economy. Trump also indicated that progress could be made in trade talks with China, with the US president stating: "We are very close." Reports in the South China Morning Post on Sunday suggested that Washington and Beijing were preparing to announce a 90-day extension to the tariff pause to allow negotiations to continue, ahead of the August 12 deadline.

Markets rallied sharply last week after Trump reached a trade deal with Japan, the world's fourth-largest economy, amid investor hopes that the measures announced by Washington in the president's "Liberation Day" plan for April 2 could be avoided. Speaking to von der Leyen in the DJT Ballroom at his Turnberry golf resort, Trump declared himself "very honored" to have reached the deal and told the European Commission president that her staff had been "fantastic." The two sides shook hands and congratulated each other in front of a bilateral delegation that included U.S. Secretary of Commerce Howard Lutnick and U.S. Trade Representative Jamieson Greer.

Sitting alongside von der Leyen, looking relieved, were Šefčovič; Björn Seibert, her chief of staff; Sabine Weyand, a key player in the Brexit negotiations and now director-general of the EU Trade Commission; and Tomas Baert, a member of von der Leyen's cabinet who has taken a leading role in the talks.