July 28, 2025<\/a><\/p>\nThe German chancellor, Friedrich Merz, and the Italian prime minister, Giorgia Meloni, welcomed the deal, which the European trade commissioner Maro\u0161 \u0160ef\u010dovi\u010d described on a Monday as a \u201cbreakthrough\u201d in the face of a potential ruinous trade war between the world\u2019s two biggest economies.<\/p>\n
The deal will impose 15% tariffs on almost all European exports to the US including cars, about triple the 4.8% tariff now in force, but avoid the threat of punitive 30% import duties being imposed on Trump\u2019s 1 August deadline for a deal.<\/p>\n
The high-level French criticism, and Emmanuel Macron\u2019s silence since the deal was signed between Trump and the European Commission president, Ursula von der Leyen, shows potential divisions as Brussels seeks to get approval for the deal from member states.<\/p>\n
Merz hailed the deal, which was clinched in a ballroom at Trump\u2019s golf resort in Scotland, saying it avoided \u201cneedless escalation in transatlantic trade relations\u201d and averted a potentially damaging trade war.<\/p>\n
Meloni welcomed the deal, saying it had avoided \u201cpotentially devastating\u201d consequences.<\/p>\n
Speaking at a summit in Ethiopia, she said a \u201ctrade escalation between Europe and the US would have had unpredictable and potentially devastating consequences\u201d, while adding that Rome would have to \u201cstudy the details\u201d of the deal.<\/p>\n
European stock markets hit a four-month high at the start of trading on Monday, amid relief that a deal had been reached. Germany\u2019s Dax jumped by 0.86%, and France\u2019s Cac 40 index rose by 1.1%, lifting the pan-European Stoxx 600 index to its highest level since late March.<\/p>\n
The rally fizzled out after France, considered the co-pilot of the EU project along with Germany, made clear its disapproval.<\/p>\n
\u201cThis state of affairs is not satisfactory and cannot be sustained,\u201d the French European affairs minister, Benjamin Haddad, said on X, urging the EU to activate its \u201canti-coercion instrument\u201d, which would allow for non-tariff retaliation.<\/p>\n
The French trade minister, Laurent Saint-Martin, criticised the EU\u2019s handling of the negotiations, saying the bloc should not have refrained from hitting back in what he described as a power struggle initiated by Trump.<\/p>\n
\u201cDonald Trump only understands force,\u201d he told France Inter radio. \u201cIt would have been better to respond by showing our capacity to retaliate earlier. And the deal could have probably looked different.\u201d<\/p>\n
The euro fell by almost 1% against the US dollar, down one cent to 1.163.<\/p>\n
Fresh details have emerged of the deal, with senior officials saying the 15% tariff on EU exports would apply to 70% of goods sold to the US.<\/p>\n
Zero rates will apply to EU exports in important sectors including aircraft parts, some chemicals, semiconductor equipment and some agricultural products such as cork used in wine bottles and flooring.<\/p>\n
The EU pharmaceutical sector will not face tariffs of more than 15% under the deal it struck with Trump, officials have said.<\/p>\n
Senior EU officials revealed that pharma exports from the EU will remain duty free until such time as Trump completes his section 232 national security investigation into pharmaceuticals.<\/p>\n
Even if he does decide to impose tariffs on pharmaceuticals in the future, EU officials extracted a commitment from Trump that they will be set at a top level of 15% when it comes to EU products.<\/p>\n
He started his negotiations on Sunday by demanding the EU pay 30% tariffs on exports to the US, followed by 21% and finally settled on 15% in talks that were described as \u201cvery intense\u201d, it has emerged.<\/p>\n
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The side deal will come as a big relief to Belgium, Germany, Denmark and Ireland, which have strong pharmaceutical sectors and were looking at potential tariffs of up to 200% next year, according to Trump.<\/p>\n
Further details of the deal emerged on Monday but tariffs on important sectors such as steel and wine and spirits will now be the subject of detailed negotiation.<\/p>\n
Tariffs on steel will remain at 50% until a new deal, centred on quotas, is agreed, officials have said.<\/p>\n
\u201cThe US are very much in need of our high-speciality steel,\u201d \u0160ef\u010dovic said on Monday.<\/p>\n
EU officials said agriculture barriers still firmly applied to US food imports, apart from a list of duty-free products that will be finalised in the coming days, and will include some products not produced in the EU such as nuts, some processed fish, dairy products and pet food.<\/p>\n
Wines and spirits are still on the negotiating table, and EU officials expect the list of products that will get a zero rate in the US will be extended in the coming weeks.<\/p>\n
Technically the European Commission has the mandate to press ahead with the deal, but it has sought consensus backing from member states throughout the past four months and this is not expected to change.<\/p>\n
It expects a \u201crelatively light\u201d joint statement to emerge before, or on Friday, followed by executive orders issued by Trump.<\/p>\n
This will give legal status to the 15% tariff rates immediately in the US but the EU suite of tariff changes will not come into force until legal instruments have been signed, which may take longer than a week.<\/p>\n
The German bank Berenberg said the deal brought to an end the \u201ccrippling uncertainty\u201d but said it was a victory for Trump.<\/p>\n
\u201cIt is great to have a deal. In two major respects, however, the outcome remains much worse than the situation before Trump started his new round of trade wars early this year,\u201d said Holger Schmieding, Berenberg\u2019s chief economist.<\/p>\n
\u201cThe extra US tariffs will hurt both the US and the EU. For Europe, the damage is mostly front-loaded,\u201d Schmieding said in a note to clients on Monday morning.<\/p>\n
\u201cThe deal is asymmetric. The US gets away with a substantial increase in its tariffs on imports from the EU and has secured further EU concessions to boot. In his apparent zero-sum mentality, Trump can claim that as a \u2018win\u2019 for him,\u201d Schmieding added.<\/p>\n
The Italian bank UniCredit also said Trump had got the better out of the EU. \u201cIs this a good deal for the EU? Probably not. The outcome is heavily asymmetrical, and it leaves US tariffs on imported EU goods at much higher levels than EU tariffs on imports from the US,\u201d UniCredit said in a note to clients.<\/p>\n