President Donald Trump and European Commission President Ursula von der Leyen announced a trade deal between the United States and the European Union on July 27.
The agreement will see automobiles and many other imports taxed at 15 percent, instead of the 27.5 percent tariff that Trump had threatened to enact on August 1.
The tariff also applies to car parts and semiconductors, according to the White House.
After the United States and Japan came to an agreement on a trade deal last week, the U.S. has now reached another settlement regarding tariffs, this time with the European Union. The deal will lower the import tariffs applied to European goods, including automobiles. Still, there are many details that have yet to be confirmed. The deal arrived in the nick of time, as President Donald Trump's increased tariffs were set to go into effect on August 1.
The deal was announced by Trump and European Commission President Ursula von der Leyen on July 27 in Scotland. The agreement will see European imports to the United States slapped with a 15 percent tariff, rather than the 27.5 percent tariff that was set to be implemented when the calendar turned over to August. This new 15 percent figure will also go into effect on August 1.
Trump and Von der Leyen contradicted one another slightly in their comments, as reported by Automotive News. While Trump said the deal concerned "automobiles and everything else," but that it would exclude pharmaceuticals and metals, Von der Leyen said it applied to drugs, computer chips, and cars. The documentation provided by the White House states that the tariff applies to automobiles and auto parts, pharmaceuticals, and semiconductors.
Von der Leyen stated that the 15 percent tariff was inclusive of industry-specific tariffs and that the 15 percent wouldn't be added atop those pre-existing taxes. A 50 percent tariff on steel, copper, and aluminum remains in effect, but Von der Leyen suggested that taxes on metals "will be cut and a quota system will be put in place."
The White House also said the EU has agreed to buy $750 billion of American energy products and invest $600 billion in the U.S. by 2028. The White House also stated that the EU will buy "vast amounts" of military equipment and open up its member nations' markets to trade with the U.S. with zero tariffs. A senior U.S. administration official reportedly said that Trump also can increase the tariffs in the future if the European Union doesn't meet the amounts that it has pledged to invest. More details about the trade deal between the U.S. and the European Union should emerge over the next week as the August 1 deadline approaches.
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