The U.S. and European Union have reached a last-minute trade deal to avoid a damaging tariff war. Announced in Scotland by President Trump and European Commission President Ursula von der Leyen, the agreement settles on a 15% tariff for most EU goods heading to the U.S., which is much lower than the 30%+ that had been on the table. In exchange, the EU will ramp up investment in the U.S., pledging around $600 billion, and increase purchases of American energy and military equipment. Some industries, like aerospace and pharmaceuticals, get a pass from the tariffs. But steep duties on steel and aluminum are staying put at 50%.
It is important to keep in mind that this isn't a full trade agreement yet. It’s being called a “framework,” meaning many important issues are still undecided, including what happens with EU spirits, farm goods, and certain medicines. This agreement is more about preventing a trade war for now than settling all the differences.
Additionally, some industries will see a break from this potential deal, but not all. Sectors like aerospace parts, chemicals, and generic drugs will avoid the new tariffs. But others, like European steel and aluminum, are still facing a hefty 50% tariff.
Ursula von der Leyen noted, "We have a trade deal between the two largest economies in the world, and it's a big deal. It's a huge deal. It will bring stability. It will bring predictability," she said. [From Reuters]
PSA BDP will continue to share additional updates as they become available.
