By Staff, Agencies

European Commission President Ursula von der Leyen and US President Donald Trump reached a last-minute agreement Sunday that staves off a looming transatlantic trade war, securing a major framework deal ahead of the August 1 deadline.

The deal reduces proposed tariffs on European exports and deepens economic cooperation between the two sides.

Tariff Relief and Sector Impact

Under the agreement, the US will impose a 15% across-the-board tariff on most EU goods, a significant reduction from the initially threatened 30%. This mirrors the rate previously negotiated with Japan and offers relief to European businesses, particularly the auto industry, which employs about 13 million people.

Automakers had been facing combined tariffs of up to 27.5% under Trump’s previous trade measures. While 15% is still significantly above the pre-existing average of 4.8%, experts consider the outcome “manageable,” especially for Germany and other EU nations with major automotive supply chains.

Energy and Investment Commitments

In a strategic shift away from Russian energy, the EU also committed to purchasing $750 billion worth of liquefied natural gas, oil, and nuclear fuels from the United States over the next three years.

Additionally, Europe pledged $600 billion in new investments into the US economy. Trump also claimed that EU states would be buying “hundreds of billions of dollars” in military equipment as part of broader NATO-related spending increases.

Product Exemptions and Special Deals

The deal includes tariff exemptions on a range of goods, such as aircraft, select chemicals, semiconductor equipment, certain agricultural products, and critical raw materials.

Key EU exports like pharmaceuticals and semiconductors – vital for Ireland – were spared from punitive tariffs threatened earlier by the Trump administration.

Brussels and Washington also reached a compromise on steel exports: a quota system will be introduced, and EU steel will face 50% tariffs only after surpassing agreed volume thresholds.

Pending Issues and Next Steps

While both leaders hailed the agreement, it is still a preliminary framework that must now be ratified by EU member states. Ambassadors are set to meet Monday morning for a briefing. Technical negotiations will continue in the coming weeks to finalize details – including unresolved issues like alcohol tariffs, with France and the Netherlands pushing for special treatment for wine and beer exports.

Von der Leyen emphasized the deal’s flexible nature, stating that although major areas were settled, several specifics remain under discussion.