The European Union (EU) and the United States (US) have reached a new agreement to streamline trade relations, aiming to eliminate industrial tariffs on U.S. products while capping U.S. tariffs on European goods at 15% across most sectors, according to a joint statement issued Thursday.
Under the terms of the agreement, the European Commission, the EU’s executive branch, will remove tariffs on all U.S. industrial goods. In exchange, the U.S. will implement a total tariff cap of 15% on most EU exports, including automobiles and pharmaceuticals. The U.S. will also limit tariffs on European cars and car parts to 15%, contingent on the EU’s reduction of tariffs on American vehicles. Talks on aluminum and steel will continue to finalize additional agreements.
Commission President Ursula von der Leyen emphasized the ongoing collaboration: “This is not the end of the process. We continue to engage with the U.S. to agree on more tariff reductions, identify areas of cooperation, and create greater economic growth potential.”
The new terms build on a preliminary deal reached in late July, which set a 15% U.S. tariff rate in principle. The automotive and pharmaceutical sectors, previously under heightened tariff pressure, will now benefit from reduced rates, alleviating industry concerns. The German Association of the Automotive Industry had urged a swift resolution, citing a previous 27.5% tariff rate on vehicles during ongoing negotiations.
In addition, the European Commission will grant the U.S. preferential market access for agricultural products, including dairy, processed foods, and select meats, reinforcing transatlantic trade cooperation.
EU Trade Commissioner Maroš Šefčovič highlighted the stakes: “The alternative — a trade war with sky-high tariffs and political escalation — would harm jobs, growth, and businesses on both sides of the Atlantic.”
The agreement addresses tariffs imposed under Section 232 of the Trade Expansion Act of 1962, initially used by President Donald Trump to target EU products, including vehicles and metals. Section 232 tariffs will now be capped at 15%, reducing uncertainty for global markets.
While some experts remain cautious about long-term stability, the EU-US agreement represents a significant step toward a more predictable and cooperative trade relationship. Discussions will continue to explore additional areas, including aluminum, steel, and derivative products, as both sides work toward mutually beneficial solutions.
