US, EU agree key details of trade deal in joint statement
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The news: The US and European Union issued a joint statement detailing plans on their trade framework across contested sectors of automobiles, pharmaceuticals, semiconductors, lumber, steel and aluminium.
The context: The joint statement formalises the parties’ trade pact and represents an advancement of the initial deal announced last month, which had set out 15% blanket tariffs on EU exports to the US. The EU had also committed to purchase USD750 billion ($1.17 billion) worth of US energy, as well as to invest at least another USD600 billion in the US.
The statement released Thursday outlines specific benchmarks for the EU to lock-in sectoral tariff discounts on cars, pharmaceuticals and semiconductors, as well as new commitments for addressing the bloc’s digital services regulations.
On automobiles, the US will codify reduced tariffs once the EU “formally introduces the necessary legislative proposal to enact” its own promised tariff reductions. The discounted 15% tariffs on EU auto imports (less than a 27.5% Trump previously imposed) would be effective from the start of the same month that legislation is advanced.
A senior Trump official told Bloomberg that this could be in place within weeks. The source explained that the trigger was designed to ensure that the EU delivers on its promised tariffs reductions and remains under sufficient pressure to obtain the political mandate needed to get the changes across the line.
On digital services the US and EU said they will address “unjustified digital trade barriers”, with the EU confirming it won’t adopt network usage fees, and neither party will impose customs duties on electronic transmissions.
The EU’s pharmaceutical sector will see tariffs capped at up to 15% and will not be imposed in addition to other EU-wide tariffs. Trump has recently threatened to impose levies as high as 250% on pharmaceutical imports. On semiconductors and lumber, the US said it will also renew its commitment to cap sectoral tariffs at 15%.
On steel and aluminium, the US and the bloc said they 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."
What they said: Ursula von der Leyen, president of the European Commission said: “Faced with a challenging situation, we have delivered for our Member States and industry, and restored clarity and coherence to transatlantic trade. This is not the end of the process, we continue to engage with the US to agree more tariff reductions, to identify more areas of cooperation, and to create more economic growth potential. At the same time, we continue to diversify our international trade partnerships, creating EU jobs and prosperity.”
