US-EU Trade Breakthrough: New Tariff Deal Slashes Industrial Goods Duties and Reshapes Transatlantic Economic Landscape
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US-EU Trade Breakthrough: New Tariff Deal Slashes Industrial Goods Duties and Reshapes Transatlantic Economic Landscape
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In late July, the United States and the European Union finalized their most significant trade pact in years, following months of heightened tensions and reciprocal threats. According to BDO USA, the deal, concluded on July 28, designates the EU as the largest trading partner of the United States, with bilateral trade topping $976 billion in 2024. Under this new arrangement, European Union tariffs on U.S.-originating industrial goods, based on specific tariff codes, will be reduced to zero. In exchange, EU-originating goods will be subject to a new U.S. reciprocal tariff rate, in line with recently published executive orders and Customs and Border Protection guidance.
This reciprocal tariff system, taking effect August 7, as reported by Mallory Group and U.S. Customs and Border Protection, sets a general rate of 15% for many EU imports. For goods where the Most Favored Nation (MFN) tariff rate is lower than 15%, a special reciprocal tariff increases the total duty to 15%. For items where the MFN rate is already 15% or higher, no additional tariff is imposed. Vehicles and auto parts from the EU will now see a 15% tariff, which is notably lower than the 25% Section 232 duties currently levied on similar items from most non-European trading partners.
Pharmaceuticals and semiconductors from the EU are also included in the 15% rate, which BDO USA notes will effectively preempt the imposition of any future “national security” tariffs under ongoing Department of Commerce investigations. A longstanding friction point—sectoral tariffs on steel, aluminum, and copper—remains unchanged, with the EU required to continue paying duties as high as 50% on these products.
On the consumer side, Yale Budget Lab data highlights that the Trump administration’s broad tariff regime will cost American households an average of $2,400 by the end of 2025, primarily through incremental increases in consumer prices totaling about 1.8% inflation. This policy has also led to record-breaking customs duty collections, surpassing $100 billion so far this fiscal year, as reported by the Treasury Department.
Recent reports from Supply Chain Dive confirm that the EU has agreed to delay its own retaliatory countermeasures by six months, as both parties establish fair quota frameworks and work toward eliminating red tape, particularly for small and medium-sized U.S. exporters.
Listeners, thank you for tuning in to this edition of European Union Tariff News and Tracker. Be sure to subscribe to stay ahead of every tariff shift and trade headline. This has been a quiet please production, for more check out quiet please dot ai.
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