Trump deal with Europe underlines new standard of (at least) 15% tariffs

Yahoo

4 days ago

One thing was clear about a vague trade deal announced Sunday by President Trump and European Commission President Ursula von der Leyen: a headline tariff rate of 15% on European goods.
It's the latest example of a new tariff floor for Trump that has been backed by other recent deals and letters, including one with Japan this past week that also saw a 15% rate.
"We'll have a straight simple tariff of anywhere between 15% and 50%," Trump asserted.
Both Trump and von der Leyen highlighted the 15% rate Sunday after their meeting in Scotland. Trump claimed a 'straight-across tariff of 15%' for 'automobiles and everything else,' adding that US exports to Europe would face a 0% rate.
Von der Leyen confirmed the 15% tariffs 'across the board and inclusive," adding that it would bring stability and predictability to US-Europe relations.
Comments later in the day from the European Commission President suggested that it might be a little more complex and that the deal also included "zero for zero tariffs on a number of strategic products" including aircraft components and other products like some minerals.
Trump added that the deal includes hundreds of billions of dollars in new EU purchases of U.S. energy as well as military equipment.
The 15% rate may get a mixed reaction in Europe after negotiators had previously pushed for free trade (or more recently a 10% rate), but it's a halving from the 30% tariffs Trump promised in a letter earlier this month.
Sunday's agreement with the European Union — America's largest trading partner — comes following agreements with Vietnam, the Philippines, and Indonesia with saw tariff rates of between 19% and 20%.
Only one negotiation has seen Trump agree to a tariff below 15% — a pact with the UK in May — with Treasury Secretary Scott Bessent writing earlier this month that "usually the first person who makes a deal makes the best deal."
Some details unclear
Trump also said Sunday that many of the remaining countries facing a deadline of Aug. 1 would face a letter dictating rates, saying they would be be 'very universal for most' and that the European deal is 'the big one.'
The president said three to four additional countries could be in for deals in the coming days while most nations would simply get letters.
In any case, the 15% baseline is a shift — even from recent weeks.
Trump earlier this month said that many countries would see a rate of 'probably 10% or 15%, we haven't decided yet.' Even last Sunday, Commerce Secretary Howard Lutnick told CBS: "You should assume that the small countries... will have a baseline tariff of 10%."
This new standard is also notable fulfillment of an oft-made campaign trail promise that saw the then-candidate pledge to create a "ring around the collar" of the US economy with a blanket rate of between 10% and 20%.
Fulfilling that pledge — which was often dismissed as unrealistic at the time — has now become not only accepted but even a plus for markets after six months of Trump's second term have seen threats of higher duties that have reordered world trade actions.
The recent announcement of the deal with Japan with a 15% tariff on goods like autos was welcomed by traders and helped fuel rises in US markets as well as the Japanese Nikkei 225, which immediately surged on the news.
Japanese automakers in particular saw a jump after that deal as those companies celebrated a lowering of auto tariffs from 25% to 15%. European automakers now find themselves in a similar position.
Trump, meanwhile, says he has no plans to amended his other sector specific tariffs as part of the European Union deal — even as Von der Leyen suggested they would largely be covered by the deal.
There are 50% tariffs currently levied on steel and aluminum (with planned duties at the same rate on copper), and Trump said Sunday that those tariffs are a "worldwide thing that stays the way it is."
Trump also reiterated his promises of sectoral tariffs on semiconductors and pharmaceuticals to be rolled out, which could be much higher than 15% — unless Europe gets a carveout.
And Von der Leyen suggested the 15% rate would apply in comments later Sunday when she said the 15% rate would apply to "the vast majority of EU exports...including cars, semiconductors, pharmaceuticals" as she called the rate "a clear ceiling."
Also on Sunday, Commerce Secretary Howard Lutnick said that a new semiconductor tariffs are nearly ready and would be unveiled in about "two weeks time."
This story has been updated with additional developments.
Ben Werschkul is a Washington correspondent for Yahoo Finance.
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