TMTPOST -- The White House on Monday unveiled details of a massive trade deal with the European Union to avert transatlantic tariff escalation before the August 1 deadline, confirming the announcement of U.S. President Donald Trump and European Commission President Ursula von der Leyen.
Credit：China Central Television
The United States and the EU reached a Cooperation Agreement on Reciprocal, Fair and Balanced Trade that will provide Americans with “unprecedented levels of market access” to the EU, help reduce the goods trade deficit with the bloc, according to a fact sheet released by the White House. It touted the agreement as a pact achieving “historic structural reforms and strategic commitments that will benefit American industry, workers, and national security for generations.”
Following his in-person meeting with ven der Leyen on Sunday, Trump that day said the U.S. would set a baseline tariff of 15% for most European goods, including automobiles, and the EU had agreed as part of the deal to buy $750 billion of energy products from the U.S. and invest an additional $600 billion in his country.
As a the centerpiece of the U.S.-EU agreement, the fact sheet from the White House confirmed the EU’s committed energy purchases worth of hundreds of billions of dollar. “The EU will double down on America as the Energy Superpower by purchasing $750 billion of U.S. energy exports through 2028,” the White House said in the release, suggesting the purchases will not just strengthen the U.S. energy dominance, but reduce European reliance on “adversarial sources” like Russia.
The EU will also invest $600 billion in the U.S. over the course of Trump’s term, on top of the over $100 billion EU companies already invest in the U.S. every year, according to the fact sheet. But it didn’t reveal how such a large committed investment could be translated into reality.
Trump on Sunday said the EU agreed to purchase “vast amounts” of military equipment. Echoing Trump’s remarks, the White House’s fact sheet said the EU agreed to purchase “significant amounts” of U.S. military equipment, short of exact size or the anticipated range of the committed purchases.
The trade deal effectively brings down tariffs that the EU exports to the U.S. will face from the 30% levies Trump threatened earlier this month. The 15% tariffs will cover about 70% of EU goods bound for the U.S., about €780 billion, or more than $900 billion. Without the new deal, the total U.S. average effective tariff rate on the EU would rise to nearly 18% on August 1 from 13.5% under current policies, Blooomberg estimated. The average tariff rate under the deal is down to 16%.
Trump on Sunday claimed a “straight-across tariff of 15%” for “automobiles and everything else,” adding that U.S. exports to Europe would face a 0% rate.
Von der Leyen the same day said the 15% tariff level “is the best we could get”, and the level would cover cars, which were subject to duties of 27.5%, semiconductors and pharmaceuticals, which the Trump administration has not impose any new tariffs yet but signaled extra duties would come on the horizon. Both sides had not taken any decision on tariffs regarding wine and spirits, she added.
The fact sheet on Monday said the EU will eliminate all of tariffs on U.S. industrial goods exported to the bloc, and pay a tariff rate of 15%, including on autos and auto parts, pharmaceuticals, and semiconductors. “However, the sectoral tariffs on steel, aluminum, and copper will remain unchanged—the EU will continue to pay 50% and the parties will discuss securing supply chains for these products,” it added. Key to getting the 15% tariff rate for pharmaceuticals and semiconductors was the EU’s pledge to make U.S. investment, Bloomberg on Monday cited people familiar with the matter.
EU officials on Sunday said the two sides agreed on a quota, above which the 50% tariffs on steel and aluminum imports would apply, but U.S. officials said nothing had been agreed upon. The U.S. under the deal will grant exemptions for about €70 billion of trade, according to Brussels. Von der Leyen announced that zero-for-zero tariffs will apply to "all aircraft and component parts, certain chemicals, certain generics, semiconductor equipment, certain agricultural products, natural resources, and critical raw materials."
The White House in the fact sheet didn’t mention the tariff-exempt products. It said the EU will work to remove tariff and non-tariff barriers for the U.S. exports. For agricultural goods, the EU and the U.S. will streamline requirements for sanitary certificates for U.S. pork and dairy products. As part of efforts to reduce barriers for digital trade, the EU confirms it will not adopt or maintain network usage fees. Furthermore, the U.S. and the European Union will maintain zero customs duties on electronic transmissions.
