- First, the EU needs to begin the process of importing more goods from the US.
- The Union agreed to purchase $750 billion worth of energy supplies until 2028.
- European automakers are relieved, even if Trump’s actions have decreased profits.
European car manufacturers have been granted a welcome reprieve as US tariffs placed on them will be reduced to 15 percent, with the measure being retroactively applied from August 1. This news comes three weeks after a new trade agreement was reached between the United States and European Union in late July.
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Prior to President Donald Trump returning to the Oval Office, EU tariffs had been pegged at just 2.5 percent. However, car manufacturers have recently been hit with 27.5 percent tariffs and prior to last month’s deal, Trump had threatened sweeping 30 percent tariffs across most major industries.
Read: US And EU Reach Mega Trade Deal That Could Shake Up The Auto Industry
Automobiles had been excluded from the new 15 percent base tariff after Trump’s meeting with European Commission President Ursula von der Leyen. They have now been confirmed to also be eligible for this reduced tariff.
In exchange for the United States agreeing to retroactively apply these lower tariffs from August 1, the European Union will eliminate tariffs on all US industrial goods and must provide preferential market access for US seafood and agricultural goods. This includes tree nuts, dairy products, fresh and processed fruits and vegetables, processed foods, planting seeds, soybean oil, and pork and bison meat.
Additionally, the EU says it intends to procure liquefied natural gas, oil and nuclear energy from the United States to the tune of $750 billion through 2028. It also plans to purchase at least $40 billion worth of AI chips from America for its computing centers and has committed to “substantially increase” procurement of military and defense equipment from the United States.
On its part, the US will only institute the lower 15 percent tariffs on European cars after the EU begins the legislative process to import certain goods. According to European Union trade commissioner Maros Sefcovic, the bloc is “working very hard” to complete this process.
The news is not so good for Europe’s wine and spirits industry, though, which exports $9 billion worth of products to the US each year. The EU had hoped to get an exemption for the industry, reduce tariffs to zero, but wasn’t able to do so.
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