The United States and the European Union finalized a framework trade agreement on Thursday that they reached last month, which includes a 15 percent tariff on American imports of most European goods, including cars, pharmaceuticals, semiconductors, and lumber.
Under the agreement, the EU has promised to eliminate tariffs on all American industrial products and provide preferential market access for a range of American agricultural products and seafood, according to a joint statement from the USA and the EU.
Washington will take steps to reduce the current tariff rate of 27.5 percent on imports of European cars and automotive parts into the USA after Brussels enacts the necessary legislation to implement the promised tariff reductions on American products, the statement said.
American President Donald Trump and European Commission President Ursula von der Leyen announced the trade agreement on July 27 at Trump’s golf course in Scotland, following a one-hour meeting that came after months of intense negotiations.
The two leaders met again this week as part of negotiations to end the Russian war in Ukraine, and they called their framework trade agreement a historic achievement. The joint statement also noted that the agreement could be expanded in the future to additional areas, further improving market access.
European car manufacturers could be relieved from high American tariffs within a few weeks, a senior official from Trump’s administration told Reuters.
“As soon as they enact those laws, and I don’t mean just passing and fully implementing them, but truly enacting them, we will be able to relieve (European car manufacturers). And I can say both sides want to get this done quickly,” the official said.
The joint statement is a way for the parties to “hold each other accountable” and ensure that both sides responsibly fulfill the promises made last month, he explained.
“We are trying to align the sequence of moves with the European Union to ensure they feel a sufficient level of pressure to obtain the authorizations they need to start the legislative process for lowering tariffs, as they promised,” the official stated, emphasizing that he is confident the other side will do so, but that the joint statement has allowed both sides to achieve mutual understanding and timing alignment of actions.
The reduction of American tariffs on cars and automotive parts will take effect on the first day of the month in which the EU enacts the promised laws, offering the possibility of retroactive relief for car manufacturers, the joint statement noted. It is still unclear when Brussels will begin the legislative process.
The statement also notes that starting September 1, the USA will charge only the lowest tariff rate for most-favored nations on imports of European aircraft and aircraft parts, generic drugs and ingredients, chemical precursors, and unavailable natural raw materials, such as cork.
The EU will purchase liquefied natural gas (LNG), oil, and nuclear energy products from the USA worth $750 billion, as well as American artificial intelligence chips worth $40 billion, the joint statement highlights.
Additionally, companies from the European Union will invest an additional $600 billion in strategic American sectors by 2028.
Both sides have committed to addressing “unjustified barriers to digital trade,” the statement says, and the EU has pledged not to impose fees for network usage.
The USA and EU have also agreed to negotiate rules of origin to ensure that both trading partners benefit from the agreement.
Furthermore, they will consider cooperation in defending their steel and aluminum markets from excess capacity, ensuring secure supply chains between the USA and the EU, along with the introduction of tariff quotas, the joint statement states.
