EU-US Trade: Brussels Awaits Executive Orders to Formalize Tariff Deal

The European Union is currently awaiting crucial executive orders from Washington, a pivotal step to formalize a recent political agreement designed to prevent the imposition of higher tariffs on European goods. This period of anticipation is critical for a diverse range of industries, as businesses across the transatlantic market seek clarity and stability following the handshake agreement between European Commission President Ursula von der Leyen and President Donald Trump. The successful implementation of this understanding is paramount for the health of transatlantic trade relations and for mitigating potential economic disruptions that could arise from trade disputes.

• The European Union awaits U.S. executive orders to formalize a recent political agreement on tariffs.
• The deal aims to establish a 15% tariff ceiling on most EU imports, replacing current higher rates.
• Key exemptions include a 0% tariff for aircraft and “zero-for-zero” rates for specific goods like certain chemicals and semiconductors.
• U.S. 50% tariffs on steel and aluminum are expected to remain, with negotiations ongoing for a new quota system.
• Broader negotiations face hurdles over “non-tariff barriers” and the specifics of EU commitments on U.S. energy and defense purchases.

Anticipated Tariff Reductions and Deadlines

Brussels anticipates that the United States will implement an agreed-upon, across-the-board tariff ceiling of 15% on the majority of EU imports. This new rate would specifically supersede the existing 25% tariff on EU-manufactured cars and a 10% rate applied to all other EU imports. The European Commission expects these executive orders to be issued before August 1, a timeline established to provide immediate relief to strategic sectors such as the automotive industry and to avert the 20% “reciprocal” tariffs previously threatened by the U.S. administration.

Key Sectoral Exemptions and Ongoing Discussions

Significant tariff exemptions have been secured through these negotiations, notably a 0% tariff rate for aircraft. Furthermore, “zero-for-zero” tariffs are expected to apply to specific categories of goods, including certain chemicals, generic pharmaceuticals, semiconductor-making equipment, selected agricultural products, and various natural resources and critical raw materials. Despite these advancements, negotiations remain ongoing for other strategic sectors, particularly wine and spirits, which are not currently slated for exemptions under the agreement.

Persistent Challenges: Steel and Aluminum Tariffs

Despite the progress in other areas, the 50% U.S. tariffs on steel and aluminum imports are expected to remain in place. This particular strategic sector continues to be under active negotiation, with the EU advocating for the establishment of a new quota system that would feature lower tariffs. While both sides are committed to working towards a resolution, a swift implementation of a new framework for these materials is not immediately anticipated, indicating a longer path to a definitive agreement in this area.

Broader Negotiation Hurdles and Interpretive Divides

Further complexities arise in the negotiation of a joint statement, largely due to persistent and significant interpretative differences between the EU and the U.S. These divergences are particularly pronounced regarding what the U.S. terms “non-tariff barriers” to its exports, with specific references to EU digital regulation and phytosanitary rules. While the U.S. advocates for easing these regulations to facilitate its exports, the EU continues to firmly assert its sovereignty over its legislative powers and regulatory framework. Additionally, the precise wording of the EU’s commitments regarding the purchase of U.S. energy, weapons, and investment pledges remains a subject of intense and detailed negotiation, highlighting the multifaceted nature of the ongoing trade dialogue.