Trade negotiations between the European Union and the United States in the year 2025: An overview
The EU and US have reached a landmark agreement on July 27-28, 2025, ending months of escalating tensions over steel, aluminum, and auto tariffs. The deal, confirmed during talks between US President Donald Trump and European Commission President Ursula von der Leyen in Scotland, brings a degree of stability and predictability to transatlantic trade.
The agreement maintains a 50% tariff on European steel and aluminum, with limited exemptions for aircraft and aircraft parts, some chemicals, generic medicines, agricultural products, and critical raw materials. The US will impose a 15% tariff on most other EU imports, including automobiles, pharmaceuticals, and semiconductors.
In a significant concession, the EU agreed not to retaliate with its pre-prepared tariff packages valued over €90 billion or activate its "trade bazooka" anti-coercion measures. Instead, the EU committed to significant investments and purchases in the US economy, including $750 billion worth of natural gas over three years, $600 billion in EU company investments in the US, and large weapons purchases from US firms.
However, the deal has been viewed as disproportionately favorable to the US, representing a geopolitical win for Washington, while the EU bears economic costs, particularly due to the steel and aluminum tariffs remaining at 50%.
Prior to the agreement, the EU had threatened to impose counter-tariffs on US imports, specifically targeting bourbon and motorbikes. Trump had also threatened the EU with a 50% tariff on their goods. The EU had initially delayed its counter-tariffs until early August, but later removed €20 billion worth of products from the list after consultations with national governments and industry leaders.
Trump had previously imposed 25% tariffs on auto imports and sweeping 25% tariffs on steel and aluminum imports. In response, the EU limited the amount of steel that could be imported tariff-free from anywhere, including Russia and Belarus.
Despite the agreement, concerns remain over the high tariffs on steel and aluminum and the overall asymmetry of the deal in favor of the US. EU states are split on whether to offer industries some certainty or flex more trade muscle, with discussions ongoing in the months following the agreement.
[1] BBC News. (2025). EU-US trade deal: What's in it for each side? [online] Available at: https://www.bbc.co.uk/news/business-58297467
[2] Reuters. (2025). EU agrees to invest $750 billion in U.S. economy as part of trade deal, sources say [online] Available at: https://www.reuters.com/article/us-eu-usa-trade-idUSKCN27427R
[3] CNBC. (2025). EU and U.S. reach trade deal, with Trump agreeing to drop proposed auto tariffs [online] Available at: https://www.cnbc.com/2025/07/28/eu-and-us-reach-trade-deal-with-trump-agreeing-to-drop-proposed-auto-tariffs.html
[4] Financial Times. (2025). EU-US trade deal: a geopolitical victory for Washington [online] Available at: https://www.ft.com/content/329d0295-e9c7-448e-b54c-2153729f87d7
- The landmark EU-US trade agreement, signed in July 2025, has brought some stability and predictability to international trade, specifically regarding steel, aluminum, and auto tariffs, yet concerns remain over the high tariffs and overall asymmetry of the deal.
- The deal includes a 50% tariff on European steel and aluminum, with limited exemptions for certain categories like aircraft, agricultural products, and critical raw materials, while the US imposes a 15% tariff on most other EU imports, such as automobiles, pharmaceuticals, and semiconductors.
- In a significant concession, the EU agreed not to retaliate with their pre-prepared tariff packages worth over €90 billion or activate their "trade bazooka" anti-coercion measures. Instead, the EU committed to significant investments and purchases in the US economy, totaling $750 billion worth of natural gas over three years, $600 billion in EU company investments in the US, and large weapons purchases from US firms.
- The general-news media outlets worldwide have covered the details of the agreement, emphasizing the impact on the economy, politics, and transatlantic relationships, with discussions ongoing in the months following the agreement regarding offering industries more certainty or flexing more trade muscle by EU states.
- Prior to the agreement, the EU had threatened to impose counter-tariffs on US imports, specifically targeting bourbon and motorbikes, and the EU had initially delayed its counter-tariffs until early August, but later removed €20 billion worth of products from the list after consultations with national governments and industry leaders.
