With European trade contracts, the US imposes 15% import duties on most EU goods – half of the rate of threatened is much higher than Europeans wanted.
President Trump and Starge agree to Gaza’s humanitarian crisis
President Trump said in a meeting with British Prime Minister Kiel Starmer that he is focusing on putting food in Gaza.
BRUSSELS – European governments and businesses responded to both relief and concerns in the framework trade agreement with President Donald Trump on Monday, acknowledging what was deemed to have avoided a deeper trade war.
The agreement, released on July 27 between two economies, which make up almost a third of global trade, places the US imposes 15% import duties on most EU goods – half the rate of threatened but far more than what Europeans wanted.
However, many of the details of the transaction were not immediately known.
“One thing is clear as we are waiting for details on the new EU-US trade agreement. This is a moment of relief, but a moment of celebration,” Belgian Prime Minister Bad de Weber wrote about X.
Trump said the deal, which includes an investment pledge that exceeds the $550 billion deal signed with Japan last week, would broaden transatlantic ties after years of what he called an unfair treatment of U.S. exporters.
It brings clarity to European manufacturers of cars, planes and chemicals. However, the EU initially wanted a zero-duty transaction. And the baseline tariff of 15% is compared to the average US import tariff rate of around 2.5% last year, with an improvement in the 30% endangerment rate, which is about 2.5%, before Trump returned to the White House.
European Commission chief von der Reyen, who described Trump as a tough negotiator, told reporters on July 27, “the best we can get.”
European stocks opened on July 28th, with the Stoxx 600 four months high and all other major blues also in the green. High-tech and healthcare stocks led the way.
German Prime Minister Friedrich Merz welcomed the deal, saying it avoided a trade dispute that was hit hard by Germany’s export-driven economy and its large automotive sector.
“The 15% rate is better than the market was afraid,” said Mohit Kumar, an economist at Jeffries.
It’s not the end of the story
EU leaders respond to Trump’s tariffs, trade contracts
European Union leaders have responded to President Donald Trump’s 15% tariffs and a $600 million US investment contract, warning of a new trade order.
The French government minister said on July 28 that the contract has several benefits — nonetheless, it was unbalanced, including exemptions that some French business sectors wanted to see, such as Spirits.
Industry Minister Marc Ferracci emphasized that more consultations are needed before the deal can be formally concluded.
“This is not the end of the story,” he told RTL Radio.
Meanwhile, European companies were wondering whether they would support the agreement or lament.
“People who are hoping for a hurricane are grateful for the storm,” said Wolfgang Große Entrup, head of the German Chemical Industry Association VCI.
“A further escalation is avoided. Still, both sides are priced higher. European exports are losing competitive. US customers are paying tariffs,” he said.
Stellantis shares have risen 3.5%, auto parts maker Valeo has risen 4.7%, and German pharmaceutical group Merck Kgaa has risen 2.9%, a sign of relief for these sectors.
But among the many unanswered questions, the EU’s promise to invest hundreds of billions of dollars in the US and rapidly increase energy purchases can turn into reality.
It was not immediately clear whether a specific pledge was made regarding the increase in investment, or whether details would still have to be slammed.
The EU has also committed to making a strategic purchase of $750 billion over the next three years, including oil, liquefied natural gas (LNG), and nuclear fuel, but the US will struggle to produce enough to meet that demand.
This is because the US LNG capacity will almost double over the next four years, but it is still not enough to increase supplies to Europe. Oil production is expected to be lower than forecasts earlier this year.
Despite the lingering unknown, analysts stressed that the transaction will help reduce uncertainty. Similar to the euro, oil prices rose on Monday.
“Now, it’s become more clear, so you’ll think there’s a little more willingness to look at investment, see expansion and see where the opportunities are, not just in the US, but around the world.”
