EU–US Trade Deal: What Businesses Need to Know

This development comes after months of transatlantic tension sparked by US President Donald Trump’s “liberation day” tariffs. It also builds on a series of recent US tariff agreements with the UK, Japan, Indonesia, the Philippines and Vietnam, as part of President Trump’s strategy to reduce the US trade deficits which, in relation to the EU, amounted to a US$235.6bn in 2024.

While certain provisions remain subject to further negotiation and clarification, the framework deal provides a degree of legal and commercial certainty for businesses engaged in transatlantic trade, mitigating the risk of immediate disruption and facilitating continued market access.

In this briefing, we summarise the key terms of the framework trade agreement and consider their potential implications for businesses engaged in transatlantic trade.

Terms of the trade agreement

Tariffs

From 1 August 2025, the following changes in tariffs will take effect.

• A single, all-inclusive 15% tariff will apply to most EU goods imported into the US that are currently subject to “reciprocal” tariffs, replacing both the standard Most Favoured Nation (“MFN”) tariff and any additional or punitive duties that the US was imposing / threatening to impose.  Where the applicable US MFN tariff exceeds 15%, that MFN rate will apply exclusively, with no further tariffs imposed.  
• The 15% baseline tariff will also apply to cars and car parts, pharmaceuticals and semiconductors.  However, the final tariff treatment of pharmaceuticals and semiconductors remains subject to the outcome of ongoing US Section 232 investigations into their national security implications.  In the interim, these products will remain subject only to existing MFN tariffs, and a separate agreement on semiconductors may still be announced.
• US tariffs on EU steel and aluminium imports will remain at 50%, rather than being reduced to 15% (as sought by EU industry).  This outcome is likely to prolong cost pressures for European manufacturers and exporters in these sectors, particularly those with integrated transatlantic supply chains.  The EU and US also committed to coordinated measures to protect their steel, aluminium, and copper sectors from “unfair and distortive” global competition.
• Aerospace tariffs for aircraft and plane parts, certain chemicals, generic pharmaceuticals, and some agricultural products will revert to the levels that applied prior to January 2025, effectively restoring tariff-free access for these goods.  This provides immediate relief for EU exporters in strategically important sectors, while the EU and US have agreed to continue discussions on expanding the list of zero-rated products.
• President Trump stated that the EU would be “opening up their countries at zero tariff” for US exports.  While the scope and legal basis of this reciprocal access remain to be clarified, it signals potential new opportunities for US businesses across a range of sectors.
• A deal remains to be struck in relation to tariffs on alcohol, with France and the Netherlands actively seeking tariff exemptions for their respective wine and beer industries. The absence of a resolution fails to provide certainty for EU alcohol exporters, particularly those reliant on access to the US market.

Other terms

• The EU has committed to increasing its purchases of US energy products by US$750bn, including liquefied natural gas, oil and nuclear fuels.  According to the European Commission President, this will be accomplished through additional annual purchases valued at US$250bn until 2027.  This shift is intended to reduce the EU’s reliance on Russian energy and will create substantial opportunities for US energy exporters, while also impacting European energy procurement strategies and pricing. 
• The EU will invest an additional US$600bn in the US economy, alongside commitments to purchase US military equipment valued in the “hundreds of billions of dollars”.  These measures are expected to benefit US defence, infrastructure, and advanced manufacturing sectors, while also deepening transatlantic capital flows and supply chain integration.

Commentary

The EU–US trade agreement provides a welcome reprieve from escalating tariff threats, but it remains a framework arrangement, with key provisions still to be negotiated.  The deal introduces a 15% tariff ceiling on most EU goods imported into the US – this is higher than the 10% rate secured by the UK, which may raise competitiveness concerns for EU exporters.

While the agreement provides short-term stability, it is structured as a framework agreement and, therefore, its full commercial impact will depend on the outcome of technical negotiations expected to take place “over the next weeks.”  Key sector-specific details, including the treatment of pharmaceuticals and semiconductors, remain unresolved.

Although the European Commission has the exclusive mandate to negotiate trade agreements on behalf of the EU, the deal will still require approval by EU Member States.  A debriefing of national ambassadors is scheduled for 4 August 2025 and the formal ratification processes are expected to follow.  Early reactions from Member States have been mixed, with some expressing concern over the concessions made.  Businesses engaged in transatlantic trade should, therefore, monitor developments closely, as the final shape of the agreement and its practical implications may evolve in the coming weeks.