After weeks of negotiations, US President Donald Trump and his European Commission counterpart Ursula von der Leyen finally reached a trade agreement, resulting in 15% tariffs on most EU goods. Signed in Scotland on a Sunday afternoon, Ursula stated it would bring “stability” and “predictability” as Trump claimed, ‘it’s the biggest of all the deals.’

Despite a lot of details shrouded in mystery, US will impose 5% baseline tariffs on European products, much lower than Trump’s 30% tariff threat.

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She said the deal will “rebalance, but enable trade on both sides,” sitting right next to the American commander-in-chief. She also acknowledged it was “the best we could get.” Meanwhile, Trump declared it was a “very big deal, biggest of all.”

The US and EU trade deal announcement was delivered as the POTUS visited one of his golf courses in Scotland.

Here are the key takeaways of the much-awaited US-EU trade deal:

US-EU trade deal: Key highlights

  1. Why it’s the biggest deal ever for Trump: In a deal worth $1.35 billion, apart from imposing a 15% tariff on European goods Trump convinced EU to buy $750 billion worth of American energy (including oil, gas, nuclear, fuel and chips) over a period of three years. The multi-nation bloc also agreed to increase its investments in the US by over $600 billion than where its current investments stand. It further signals that the EU would be buying American military equipment. Of the $3.3 trillion American imports, the EU comprises nearly $610 billion, according to the New York Times. On top of that, both sides account for 44% of the global economy, as per the Associated Press. It’s still not clear how much tariff will US pay on exports to EU.
  2. Why it’s the best deal EU could get: Despite being still higher than the US president’s minimum 10% tariff rate for some, the 15% tariff baseline remains lower than the 20% he initially proposed. It’s also lower than his grand threats of 50% and the subsequent 30% proposal. The average US tariff rate on EU exports was just 1.5 percent at the end of 2024, according to Bruegel, a research group. Stephen Olson, a former US trade negotiator now with the ISEAS-Yusof Ishak Institute told Bloomberg, “EU played a bad hand about as well as it could have.”
    Global chief of macro at ING bank, Carsten Brzeski, saw the lack of specifics tied to the deal being documented on paper as a warning of what may come later. Nevertheless, he welcomed how the agreement had finally avoided the risk of “escalation of the US-EU trade tensions” that could have gone on to hit the global economy like a wrecking ball. 
  3. Zero-for-zero tariff rate: The European Commission’s Von der Leyen said that a range of “strategic goods,” will attract no tariff on both sides. This includes aircraft and their parts, semiconductor equipment, some chemicals, specific agricultural products and certain natural resources and consequential raw materials. However, the threat of additional tariffs looms, as established by Howard Lutnick, which could flip the decision for a few inclusions in the tariff zone.
  4. No decision on pharma, metals and alcohol – Despite agreeing to levy a 15% tariff on most of the European good coming to America the two leaders failed to reach a conclusion on most contentious sectors on the table.
    Pharma: “We have 15% for pharmaceuticals,” said the European Commission leader. “Whatever the decision later on is, of the president of the US, how to deal with pharmaceuticals in general globally, that’s on a different sheet of paper.” She also added that the overall rate shouldn’t be “underestimated but it was the best we could get.” On the other hand, a Section 232 probe on pharmaceuticals is still pending. Officials still maintained that the EU tariff level will stay at 15%.
    Steel and aluminum: Since the Sunday agreement didn’t include mentions of them, Von der Leyen established further negotiations on steel and aluminum may be brought up soon. As of now, tariffs on both metals stay at 50%, given the Trump government’s global level imposition.
    No decision on tariffs on wine and spirits – ‘Matter would be sorted out in the next days,” as per the EU Commission president.
    Auto: As for where European carmakers‘ sales stand, once again, Von der Leyen noted that the 15% baseline marked a much lower rate than the current 27.5%, which particularly affected major German carmakers like Volkswagen, Mercedes and BMW.

    The German Association of the Automotive Industry (VDA) President Hildegard Muller briefly hailed the deal as “fundamentally positive” in a statement. However, she noted that the lack of documented specifics left a lot up to how the agreement is finally structured “in concrete terms and how reliable it is.” She added, “It is also clear that the US tariff of 15 per cent on automotive products will cost German automotive companies billions annually and place a burden on them in the midst of their transformation.”
  5. Did Europe capitulate to Trump’s intimidation? Calling it a ‘dark day for Europe’, French Prime Minister François Bayrou remarked, ‘when an alliance of free peoples, gathered to affirm their values and defend their interests, resolves to submission.”
    German Chancellor Friedrich Merz positively accepted the US-EU deal, given how it allows both sides to “preserve our core interests,” while also averting “unnecessary escalation in transatlantic trade relations.” Despite the welcoming comments, he also maintained that he was looking forward to “further relief in transatlantic trade.”
    Similarly, Wolfgang Niedermark, a member of the Federation of German Industries’ leadership remarked that even a 15% tariff rate would have a significantly negative impact on the German industry, which is excessively export-focussed.
    Benjamin Haddad, France’s minister for Europe, said on Monday that while the trade deal offered “temporary stability,” it remained “unbalanced.”

    Although Ireland reacted positively for a “measure of much-needed certainty,” Simon Harris, its deputy prime minister expressed “regrets” over the 15% baseline tariff rate in a statement.
    Holger Schmieding, Berenberg’s chief economist, noted that while it was “great to have a deal,” the outcome still remains “much worse than the situation before Trump started his new round of trade wars early this year.” Adding that the Trump tariffs will hurt both the US and the EU, he continued, “The 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 ‘win’ for him.”