EU-US Trade Deal Sets 15% Tariff Cap, Auto Cuts Planned

The European Union and the United States released a joint statement on Thursday detailing the framework of their recently agreed trade deal. The agreement includes a 15% tariff ceiling on most European imports to the United States and planned reductions on automobiles and auto parts. European Commission Vice President for Trade Maroš Šefčovič said the EU aims to introduce the necessary legislation by the end of the month, making the US tariff relief retroactive to Aug. 1.

Currently, US tariffs on EU automobiles and parts remain at 27.5%, a significant burden for European manufacturers. “As soon as [the EU] is able to introduce that legislation…we will be in a position to provide that relief,” a senior US administration official said, emphasizing both sides’ commitment to act quickly.

Following the July 27 announcement by US President Donald Trump and European Commission President Ursula von der Leyen in Scotland, the joint statement outlines key commitments. The EU pledged to eliminate tariffs on US industrial goods and grant preferential market access for US seafood and agricultural products, including tree nuts, dairy, fruits, vegetables, processed foods, and soybean oil.

The US agreed to apply either the pre-existing Most Favored Nation (MFN) tariff or a 15% combined rate on EU-origin goods, including automobiles, pharmaceuticals, semiconductors, and aircraft parts. For products subject to Section 232 tariffs, reductions will align with EU legislation. “No Section 232 automobile or automobile parts tariffs will apply to covered EU goods with an MFN tariff of 15% or higher,” the statement said.

Some EU sectors remain outside the exemption, including wine, spirits, steel, and aluminum, though future extensions are under discussion. Šefčovič noted, “These doors are not closed forever” regarding alcoholic beverages. The statement also calls for cooperative approaches to manage steel and aluminum overcapacity and maintain secure supply chains, including tariff-rate quotas.

Non-tariff barriers and regulatory alignment were also addressed. The EU will amend three pieces of legislation flagged by the US: the Carbon Border Adjustment Mechanism (CBAM), the Corporate Sustainability Due Diligence Directive (CSDDD), and the Corporate Sustainability Reporting Directive (CSRD). Both sides committed to mutual recognition of standards, reducing unjustified digital trade barriers, and cooperating on cybersecurity, critical mineral supply, intellectual property rights, and labor rights.