US and EU reach consensus on trade regulations and tariff policies

The European Union (EU) and the United States (US) have reached a significant milestone in their trade relations, announcing a new framework for fair, balanced, and mutually beneficial transatlantic trade. This development comes after intensive negotiations led by EU Trade Commissioner Maros Sefcovic and US counterparts Secretary of Commerce Howard Lutnick and US Trade Representative Jamieson Greer.

Under the new trade agreement, a maximum, all-inclusive tariff rate of 15% will apply to the majority of EU exports, including strategic sectors such as cars, pharmaceuticals, semiconductors, and lumber. However, regarding cars and car parts, the 15% US tariff ceiling will be applied in tandem with the EU initiating the procedures for tariff reductions vis-a-vis US products.

Sectors that are already subject to Most Favoured Nation (MFN) tariffs of 15% or above will not be subject to additional tariffs. Effective as of 1 September, a number of product groups will benefit from a special regime, with only MFN tariffs applying. These include unavailable natural resources, all aircraft and aircraft parts, generic pharmaceuticals, their ingredients, and chemical precursors.

The agreement also includes a tariff rate quota solution for EU exports of steel and aluminium, and their derivative products. The EU and US have signalled their intention to work on ringfencing their economies from overcapacity in the steel and aluminium sectors.

The EU-US trade in goods and services has doubled over the last decade, reaching €1.6 trillion in 2024, with €867 billion of trade in goods and €817 billion of trade in services. This new framework is seen as a serious and strategic deal to avoid a potential trade war that could harm jobs, growth, and businesses on both sides of the Atlantic.

The EU and US are aiming to establish a new framework for secure supply chains between each other, working together to improve these essential links. A factsheet provides additional information on EU-US trade relations, and a set of questions and answers explains the details of the new EU-US trade agreement.

This new trade deal is a testament to the enduring partnership between the EU and the US, and both parties are hopeful that it will serve as a basis for continued dialogue and the development of the transatlantic relationship. The agreement is a significant step towards strengthening economic ties between the two regions and promoting growth and prosperity for all.