Trump reaches agreement with E.U. to lower tariffs to 15%
The tariff rate is a reduction from the 30% that Trump threatened on July 12 and the 20% he said he would impose on April 2.
Announcing the agreement, Trump said the E.U. will not impose a tariff on U.S. imports. He added this agreement was 'satisfactory to both sides.'
European Commission President Ursula von der Leyen said Sunday alongside Trump that the pact 'will bring stability. It will bring predictability. That's very important for our businesses on both sides of the Atlantic.'
The agreement appears to closely mirror the trade agreement announced with Japan on Tuesday, under which Japanese imports will face a 15% import duty, which was also lower than Trump earlier threatened.
But last year, the average U.S. tariff on imports from the European Union was just 1.2%, according to Capital Economics' chief Europe economist.
The European Union has been in active negotiations with Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer for weeks and had believed it was extremely close to a deal before Trump suddenly fired off a letter on Truth Social saying he would hike tariffs to 30%. The EU's top trade negotiator made multiple trips across the Atlantic to meet with his U.S. counterparts and was set to speak by phone with Lutnick again Wednesday, according to a spokesperson for the E.U.
'Imposing 30% tariffs on E.U. exports would disrupt essential transatlantic supply chains, to the detriment of businesses, consumers and patients on both sides of the Atlantic,' European Commission President Ursula von der Leyen said after Trump's July letter.
Immediately after the letter, the E.U. said it would continue working towards an agreement of some type by the new deadline of August 1. But the bloc continued to simultaneously prepare an extensive list of U.S. products against which it could apply retaliatory tariffs if an agreement wasn't reached amid fears that Trump could end talks.
Some of those products included Boeing aircraft, U.S. vehicles and imports from politically sensitive states such as bourbon from Kentucky and soybeans from Louisiana. At the time of the announcement, the E.U. had about $100 billion worth of retaliatory tariffs ready to deploy.
Agricultural and business groups warned that 30% tariffs on the European Union could have dramatically impacted the price and availability of wines, cheeses, pasta and called the levy 'incomprehensible.'
Cars and other vehicles produced in the E.U. could still face increased prices. 'The costs for our companies have already reached the billions—and with each passing day, the total continues to grow,' the German auto trade group VDA told NBC News in a statement on July 14.
The 27 countries of the European Union are the United States' largest trading partner — its $605 billion worth of imports into the U.S. surpass Mexico, Canada and even China. The most valuable category of imports in 2024 was drugs and pharmaceuticals primarily from Ireland, followed by autos, aircraft and other heavy machinery from nations such as France and Germany.
Trump has separately threatened to impose a 200% tariff on any drugs imported into the U.S., though it would not be applied for at least 18 months. It was unclear if the deal with the E.U. would prevent that.
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