U.S. & EU Avert Trade War with New 15% Tariff Deal
The United States and European Union have struck a trade agreement, averting a potential transatlantic trade war. The deal, announced recently, imposes a 15% tariff on most goods traded between the two economic powerhouses.
The agreement, reached ahead of the 1 August 'Liberation Day' tariff deadline, provides relief to companies grappling with increased costs due to trade tensions. This includes major corporations like Heineken and EssilorLuxottica, as well as automakers across the region. The EU, the US's largest trading partner, will see top exports such as automobiles, pharmaceutical products, and aircraft components benefit from this arrangement.
The deal reduces the previously threatened 30% tariff to 15%. It also commits the EU to invest approximately $600 billion in the United States over the coming years. Additionally, the EU has agreed to purchase $750 billion worth of American energy over a three-year period. However, the US will maintain a 50% tariff on steel and aluminium outside the new agreement's scope.
The US-EU trade agreement is expected to be voted on in Brussels in the first quarter of 2026, following debates among member states and the European Parliament. Analysts suggest that other major economies may now seek similar arrangements with the US. News of the agreement has sent positive signals across financial markets, with European equities and US equity futures increasing significantly.
