The United States and the European Union have reached a trade agreement following discussions between President Donald Trump and European Commission President Ursula von der Leyen. The deal, announced on Sunday, averts a potential trade war and establishes new terms for tariffs and investments between the two economic powers. Trump stated the agreement includes a 15% tariff on most European goods entering the U.S., including cars.
Von der Leyen clarified that some products, such as aircraft and their components, certain chemicals, and pharmaceuticals, would be exempt from the new tariffs. She also noted that the 15% tariff would not be added to any existing tariffs. Trump added that the EU has agreed to purchase $750 billion worth of U.S. energy and invest an additional $600 billion in the U.S. beyond current levels.
European leaders have reacted to the agreement with a mix of relief and caution. Ireland’s Prime Minister Micheál Martin said the deal brings clarity to the EU-US trading relationship, though he acknowledged that higher tariffs would impact trade. German Chancellor Friedrich Merz welcomed the accord, highlighting the benefits for Germany’s auto industry due to the reduction of tariffs from 27.5% to 15%.
The U.S.-EU trade relationship is substantial, with a total value of 1.68 trillion euros ($1.97 trillion) in 2024, encompassing both services and goods. While the EU recorded a surplus in goods trading, it experienced a deficit in services, resulting in an overall trade surplus of approximately 50 billion euros with the U.S. last year.
