Ongoing Disputes and Continuing Trade Talks Between U.S. and EU
The US and European Union (EU) have reached a significant political understanding on a trade agreement, with both sides committing to substantial investments and purchases, as well as addressing digital trade barriers and economic security. However, the deal, which was announced in July 2025, is not yet a legally binding treaty and will undergo further negotiations.
The agreement sets a 15% tariff ceiling on most EU exports to the US, replacing previously threatened tariffs as high as 30%. Notably, tariffs of 50% remain on EU steel, aluminum, and copper exports, with "tariff rate quotas" at historic levels to reduce the impact while maintaining fair competition.
In terms of investments, the EU has pledged to buy an additional $750 billion in US energy products over the next three years and to invest $600 billion in various US sectors through 2029. In reciprocal measures, the US has agreed not to raise tariffs on exports to the EU.
Agricultural trade improvements focus on easing non-tariff barriers, such as streamlining sanitary certificate requirements for US pork and dairy products entering the EU to facilitate exports. Strong rules of origin are included to prevent third countries from unfairly benefiting from the agreement's terms.
The deal also includes provisions for EU purchases of US military equipment, signalling a strategic commercial dimension beyond traditional trade goods. Additionally, it addresses digital trade and economic security cooperation, including commitments to address unjustified digital trade barriers and enhancing supply chain resilience, investment reviews, export controls, and combating duty evasion.
However, the agreement has been met with criticism from some EU leaders, who argue that it favours the US, especially given the retention of high tariffs on certain metals and the significant EU commitments to US energy and military purchases.
Both sides are expected to engage in ongoing negotiations to reach a legally binding text. The EU and the US have also agreed to a new complaint system to address issues arising from the ongoing negotiations, which may provide a means for ensuring a legally binding text in future trade agreements.
Meanwhile, the EU-Canada trade deal is set to be signed by governments, marking a separate agreement from the one currently in negotiation with the US. European markets may only allow limited quantities of "certain non-sensitive" agricultural products, and no outcome was reached at the final meeting on the EU-Ukraine Free Trade Area.
A formal joint statement on the US trade deal is anticipated this week, and the European Union has released a new complaint system to address violations and market barriers in trade deals. The White House has emphasized "historic structural reforms and strategic commitments," while the European Commission regards the handshake deal as "not legally binding." The US has described the EU's energy and corporate investments as firm commitments, while Europe has used less definitive language.
In summary, the US-EU trade agreement is a political understanding with significant commitments from both sides, including large EU purchases of US energy and investments, as well as EU purchases of US military equipment. The deal includes the imposition of 15% tariffs on nearly all EU goods, with ongoing negotiations expected to reach a legally binding text. The EU has also released a new complaint system to address violations and market barriers in trade deals.
The US-EU trade agreement, despite not being a legally binding treaty yet, sets tariff ceilings and substantial investments, addressing digital trade barriers and economic security, with the EU committing to purchase $750 billion in US energy products over the next three years and investing $600 billion in US sectors. However, this development has drawn criticism from some EU leaders, who argue that it benefits the US, given the retention of high tariffs on certain metals and the significant EU commitments to US energy and military purchases.
