The United States and the European Union announced that a deal has been reached, demonstrating their commitment to “fair, balanced, and mutually beneficial trade and investment.”
“This Framework Agreement will put our trade and investment relationship – one of the largest in the world – on a solid footing and will reinvigorate our economies’ reindustrialization,” a joint statement reads. “It reflects acknowledgement by the European Union of the concerns of the United States and our joint determination to resolve our trade imbalances and unleash the full potential of our combined economic power. The United States and the European Union intend this Framework Agreement to be a first step in a process that can be further expanded over time to cover additional areas and continue to improve market access and increase their trade and investment relationship.”
Under the agreement, the United States “commits to apply the higher of either the U.S. Most Favored Nation (MFN) tariff rate or a tariff rate of 15 percent, comprised of the MFN tariff and a reciprocal tariff, on originating goods of the European Union.” As of September 1, the United States will apply the MFN tariff to select resources, aircraft parts, pharmaceuticals, and pharmaceutical ingredients and chemicals.
“With respect to steel, aluminum, and their derivative products, the European Union and the United States intend to consider the possibility to cooperate on ring-fencing their respective domestic markets from overcapacity, while ensuring secure supply chains between each other, including through tariff-rate quota solutions,” the statement adds.
The European Union will further purchase at least $40 billion worth of AI chips and “plans to work with the United States to adopt and maintain technology security requirements in line with those of the United States in a concerted effort to avoid technology leakage to destinations of concern.”
World leaders hinted at such an agreement in July, saying it promises $750 billion in EU energy purchases, up to hundreds of billions in U.S. military hardware, and $600 billion in EU investment in American businesses, all of which comes at the cost of a 15% baseline tariff on European imports to the United States.
