Trump reaches trade deal with European Union
President Trump has reached a trade agreement with the European Union that avoids setting the 30% tariff rate which had been scheduled to take effect Friday, Aug. 1.
In a fact sheet released Monday, July 28, 2025, Trump announced that the E.U. has agreed to purchase $750 billion in U.S. energy and make new investments of $600 billion in the U.S., all by 2028.
On Friday, July 11, Trump sent a letter to President Ursula von der Leyen of the E.U. informing her that the tariff rate on goods imported to the U.S. would be raised to 30% on Aug. 1 if the E.U. did not reach a new trade agreement with the U.S.
Under terms of the deal, the E.U. will pay the U.S. a tariff rate of 15% on most products it exports here, including on autos and auto parts, pharmaceuticals and semiconductors. However, existing sectoral tariffs on steel, aluminum and copper will remain unchanged with the E.U. continuing to pay 50%.
Trump’s fact sheet also stated the U.S. and E.U. will discuss “securing supply chains” for these products. Meanwhile, the EU is set to remove “significant tariffs” on U.S. imports, including the elimination of all E.U. tariffs on U.S. industrial goods exported to the E.U.
Other facets of the agreement include the E.U. providing "meaningful quotas" for purchase of other U.S. products and eliminating "red tape" for U.S. exports there. According to the Wall Street Journal, the U.S. had a trade deficit with the E.U. of $235.6 billion in 2024, a roughly 13% increase from 2023.
In commentary emailed to Chain Store Age, Gemma Thompson, senior consultant at Proxima, said the new U.S.-E.U. tariff accord offers a degree of "short-term certainty" and adds predictability to the U.S.-E.U. trade situation, but still poses some challenges.
"For E.U. exporters, the challenge now is how to absorb or pass on the additional cost,” said Thompson. “Where margins are tighter, we’re likely to see knock-on effects to U.S. consumers. Many businesses will also be exploring broader supply chain shifts - for example, routing through lower-tariff countries such as Mexico."
However, Thompson cautions that adding Mexico into the supply chain introduces potential risks from issues such as political instability, infrastructure and climate-related disruption.
“Meanwhile, U.S. exporters stand to benefit from increased E.U. investment and zero-tariff access in key categories like energy, aerospace and semiconductors, but they must also prepare operationally to meet the scale of new demand,” said Thompson.
U.S. tariff policy – a review
Mexico also faces a 30% tariff on imports to the U.S. if it does not agree to new trade terms by Aug. 1. Mexico was not included among the countries targeted for reciprocal tariffs initially placed on April 2, since it already had a 25% rate imposed on its goods.
[READ MORE: Trump's tariffs on Canada, China, Mexico take effect — countries respond]
Those reciprocal tariffs have since been postponed until Friday, Aug. 1. In addition, most China tariffs placed separately by Trump have also since been paused until mid-August as the two countries attempt to negotiate a trade deal.
In multiple actions in the past few weeks, Trump placed additional tariffs on imports from countries including Japan and South Korea as part of the delayed tariff initiative and set a new 50% tariff on Brazilian imports and 35% on Canadian imports, all effective Aug. 1.
Trump also reached an agreement in May with U.K. Prime Minister Keir Starmer that will increase U.S. access to U.K. markets while limiting tariffs on U.K. imports.