European leaders express concerns over new trade deal with US

The Guardian

6 days ago

Update:
Date: 2025-07-28T11:09:02.000Z
Title: the EU has a new trade deal with the US.
Content: Benjamin Haddad, France's Europe minister, says deal will 'bring temporary stability' but is generally 'unbalanced', calling the situation 'not satisfactory'
Jakub Krupa
Mon 28 Jul 2025 12.09 BST
First published on Mon 28 Jul 2025 09.05 BST
From
9.05am BST
09:05
Jakub Krupa
Good news:
Bad news: There don't seem to be many people who think it's a particularly good deal.
The framework agreement, agreed by European Commission president Ursula von der Leyen and US president Donald Trump at a late meeting in Scotland, manages to avert a damaging transatlantic trade war, imposing a 15% import tariff on most EU goods – half the threatened rate.
German chancellor Friedrich Merz focused on the fact that it managed to keep the unity of the European Union and offer some stability to businesses on both sides of the Atlantic, even if he would have liked the deal to achieve more.
Italian prime minister Giorgia Meloni said she needed to see the details of the deal to assess it further, asking questions about possible exemptions, promises of European investment and gas purchases from the US, and how to help affected industries.
French Europe minister Benjamin Haddad said that while the deal would 'bring temporary stability,' it was generally 'unbalanced,' calling the situation 'not satisfactory and … not sustainable.'
Not ideal.
Global markets responded positively, as you can see on our business live blog, but there is much more to this deal than that. It is not business as usual.
Elsewhere, I will be looking at Spain where the country's embattled prime minister Pedro Sánchez is due to give a summer press conference and the latest reports from Ukraine.
I will bring you all key updates from across Europe today.
It's Monday, 28 July 2025, it's Jakub Krupa here, and this is Europe Live.
Good morning.
12.02pm BST
12:02
Meanwhile over in Madrid, Spanish prime minister Pedro Sánchez is the latest to publicly respond to the EU-US agreement, saying wearily he supports the deal 'without any enthusiasm'.
He says that Europe needs to draw lessons from this situation and double down on its plans to achieve strategic autonomy and develop better trade ties with other countries, including the Mercosur bloc.
He says the EU needs to diversify its trade relations with other countries, and he supports von der Leyen's ambition to get deals with Indonesia and India.
Updated
at 12.09pm BST
11.41am BST
11:41
Responding to some criticism coming from the member states, Šefčovič warns them that the world as we knew it before April, and Trump's new trade policy, 'is gone.'
He says the EU needs to adjust and a strategic deal with the US is the best possibly option.
He repeats that 30% tariffs, the default scenario without the deal, would put companies under dramatic pressure and lead to substantial job losses, potentially eventually putting the EU to negotiate in worse circumstances.
This is the best deal we could get under very difficult circumstances.
Šefčovič adds that the conversation with the US yesterday started with a 30% tariff threat.
He adds that the deal was not only about trade, but also about broader security, Ukraine, and joint response to growing geopolitical volatility through keeping the US on side in future talks.
'I'm 100 percent sure that this deal is better than a trade war with the United States,' he says.
Updated
at 11.56am BST
11.32am BST
11:32
On China, Šefčovič says 'despite the strenuous efforts of my colleagues and myself and several long meetings with my Chinese counterpart,' there are growing trade issues with 'the list of accumulated issues on the table' not getting any shorter.
He specifically talks about subsidies, access to public procurements, and critical raw materials and export permissions.
11.25am BST
11:25
Šefčovič also talks about the energy part of the deal, saying that given the EU 'will be phasing out the Russian energy supply by 2027, it is very clear that Europe will need to solid, consolidated and reliant supply of energy,' not just LNG, but also oil and nuclear.
He also stresses the importance of working with the US on developing technologies, including high-quality chips for AI.
Updated
at 11.25am BST
11.22am BST
11:22
Šefčovič says the EU's view is that 15% is 'acceptable' if it is 'inclusive', meaning with no stacking tariffs and further changes.
He says that politically the two sides are 'opening a new chapter' and 'understand each other's senstiivties, perspectives' better after these negotiations.
11.21am BST
11:21
Not surprisingly, Šefčovič highlights what he sees as positives of the deal – including on steel, cars and future technologies - and confirms he briefed the member states and members of the European Parliament earlier today.
He stresses that 'all in all, this is an agreement which should generate meaningful and mutual benefits, and I hope it will be a stepping stone to a broader EU US trade and investment agreement in the future.'
11.17am BST
11:17
Šefčovič opens by saying the deal 'brings renewed stability and opens door to strategic collaboration.'
He says it's important to 'pause … and consider an alternative.'
He says:
'A trade war may seem appealing to some, but it comes with serious consequences. With at least a 30% tariff, our transatlantic trade would effectively come to a halt, putting close to 5 million of jobs, including those in SMEs in Europe, at grave risk.'
He says that businesses wanted to 'avoid escalation and work towards a solution that delivers immediate relief.'
11.13am BST
11:13
Jakub Krupa
EU trade commissioner Maroš Šefčovič's press briefing is about to start.
You can watch it live below, but I will bring you all the latest updates here.
11.00am BST
11:00
Kate Connolly
Reactions from Europe's largest economy over the Trump tariff deal hatched in Turnberry, Scotland at the weekend, have inevitably been mixed, with some breathing a sigh of relief that there is finally a concrete figure to work with, but others exasperated, and warning that with such an unpredictable US president, it would be foolhardy to see the figure agreed upon as set in stone.
MPs from Ursula von der Leyen's own political heimat, the CDU, as well as leading German economists have reacted with disappointment and urged caution.
Manfred Weber, leader of the European People's Party in the European parliament, described the deal as 'merely damage limitation,' in an interview with Bild, and nothing to be celebrated.
The result, he told the tabloid, 'is certainly better than many had feared.' At least, he said, 'it gives the European economy planning security'. He said the deal had made clear the importance of forging trade deals with other parts of the world, and had at least reinforced the importance of an integrated single market (even as non-EU member UK has struck a better deal).
The economic policy spokesman for the CDU/CSU, Andreas Lenz, said 15% was surely better than the 30% previously suggested, but was a 'painful compromise', which harmed both economy and consumers.
The most positive aspect of the agreement for the German economy, of course, is that the current 27.5% tariffs on cars, will be reduced to 15%
Chancellor Friedrich Merz clung to the car customs cut in his attempt to put a positive spin on the whole deal, which he said would at least avoid an unnecessary escalation in transatlantic trade relations.
'With this agreement, we have succeeded in averting a trade conflict that would have hit the export-oriented German economy hard. This applies particularly to the automotive industry, where the current tariffs will be almost halved from 27.5 percent to 15 percent. It is precisely here that the rapid reduction of tariffs is of utmost importance,' he said on Sunday.
However, the lack of a deal on aluminium and steel, currently expected to be 50%, hangs heavily over economic movers and shakers this morning.
Wolfgang Niedermark, foreign trade expert at the Federation of German Industries (BDI), called it an 'additional blow' and said it sent 'a fatal signal to the closely intertwined economies on both sides of the Atlantic.'
10.45am BST
10:45
Jakub Krupa
We should get more detail on the deal from EU trade commissioner Maroš Šefčovič as he is expected to speak at the European Commission's press conference at the top of the hour.
We will bring it live on the blog.
10.44am BST
10:44
Lisa O'Carroll
in Brussels
The zero rate tariff on US imports will not apply to sensitive agricultural products, senior officials in Brussels have confirmed.
Specifically this means exports from the US of beef, rice, ethanol, poultry, and sugar are not included in the deal clinched last night.
The concessions on tariffs have only been made on agricultural products that the EU does not grow or produce including nuts.
10.29am BST
10:29
Lisa O'Carroll
in Brussels
The 15% tariff agreed in the EU-US deal will apply to 70% of all exports to the US worth €380bn, officials have said.
Rates on pharma and steel are still being negotiated and are not expected to conclude by Friday, Donald Trump's self-imposed deal for a deadline. While the talks continue, a zero tariff rate will continue to apply on pharma and 50% on steel.
Wine and spirits are still being negotiated with talks more advanced on spirits than wine.
The EU will lower what it calls 'nuisance' or negligible tariffs on a group of products including non-sensitive agricultural products worth about €70bn a year.
The €600bn investments in the US, referred to in the deal last night refer to private investments already or about to be committed by private businesses. It does not refer to any EU fund.
Zero rated tariffs on US exports to the US will apply to a range of still to be finalised products that include nuts, lobster, processed fish, cheeses, some dairy products, and pet food.
Exports to the US that will be zero rated including aircraft and aircraft parts, some medical devices and some non-available natural resources such as cork used as bottle stoppers and flooring.
10.27am BST
10:27
Lisa O'Carroll
in Brussels
Tariffs on pharmaceuticals exported from the EU to the US will never go above 15% under the deal struck last night between Donald Trump and European Commission president Ursula von der Leyen.
Senior EU officials have said they will remain zero rated until such time as Trump completes his 232 national security investigation into pharmaceuticals.
But if he does, at the end of that, decide to impose tariffs on EU imports, they will be set at a top level of 15%.
This explains the contradictory statements last night between Trump and von der Leyen with the former claiming medicines were not in the tariff deal and the European Commission chief saying they were.
On steel, EU officials have confirmed, they are now going to open negotiations on a quota.
This is not for presidential negotiations, they have said.
On value of deal, EU officials have said that the 15% tariff will apply to 70% of all exports to the US.
Updated
at 10.28am BST
9.38am BST
09:38
French prime minister François Bayrou joined the growing list of European leaders expressing their less-than-enthusiastic reactions to the EU-US trade deal.
In his first reaction on social media, he said:
Von der Leyen-Trump Agreement: it is a sombre day when an alliance of free peoples, united to affirm their values and defend their interests, resigns themselves to submission.
9.35am BST
09:35
Senior Zelenskyy aide Andriy Yermak posted a video of a tower bloc in Kyiv hit by Russian drones saying 'this is how Putin responds to calls to end the war and sit down at the table' after another night of attacks on Ukrainian cities.
324 Russian drones and 7 missiles were reported overnight.
Yermak sought to increase pressure on Russia, saying 'there is no alternative to sanctions, increasing Ukraine's long-range capabilities, and tough actions against Putin's entourage and himself.'
[Putin] wants nothing but war and Ukraine's defeat. And there will be no defeat.
Yermak also warned that Russians were also 'testing Nato's reactions' with drones crossing into other countries, warning that these 'signals cannot be ignored' – a reference to the earlier drone incident in Lithuania (10:20).
9.20am BST
09:20
An unmanned drone is believed to have entered the Lithuanian airspace overnight from Belarus, a second this month, with residents in the capital city of Vilnius reporting the characteristic sound and later receiving an alert from authorities about the incident.
Locals were told to be cautious and not to approach the object, which was believed to have crashed in the early hours of this morning.
It was earlier sighted close to Vilnius, flying at an altitude of 200 meters, Lithuanian media reported, posting a grainy footage of the object.
The search for the drone continued this morning, and authorities told reporters they had no clarity on whether the object posed any danger.
But defence miniser Dovilė Šakalienė said that additional resources will be directed to monitor the Lithuanian-Belarusian border.
If confirmed, it would be a second case of an unmanned flying object entering Lithuanian airspace from Belarus after a decoy Gerbera drone crashed near the border at the beginning of July.
9.18am BST
09:18
Lisa O'Carroll
in Brussels
While EU leaders can breathe a huge sigh of relief that a trade deal with the US is done, the agreement is being widely seen as a victory for Donald Trump.
Several commercial banks have told clients this morning it is an 'asymmetrical' deal favouring the US over the EU.
As if to underline the contrasting fortunes of China which imposed retaliatory tariffs from the beginning, Trump has just made further concessions to Beijing.
It emerged on Monday, that Washington has paused curbs on tech exports to China to avoid disrupting trade talks with Beijing and support Trump's efforts to secure a meeting with President Xi Jinping this year.
The industry and security bureau of the US Commerce Department, which oversees export controls, has been told in recent months to avoid tough moves on China, the newspaper said, citing current and former officials.
The EU acknowledges that the deal is worse than the zero-zero tariff deal it offered Trump in April.
'Fifteen percent is not to be underestimated, but it is the best we could get,' European Commision chief Ursula von der Leyen admitted last night.
Stability and predictability would be returned to Europe's businesses and markets, she said describing the deal in Trump like terms as 'huge'.
But Renew group MEP Sandro Gozi described the deal as 'unbalanced and dangerously shortsighted.'
Hildegard Müller, president of the German car industry federation, the VDA, said 'further escalation' of a tariff and potentially trade war has been averted but added the deal would push costs up for an industry, already struggling against Chinese rivals.
'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.'
And financial institutions?
'Is this a good deal for the EU? Probably not. The outcome is heavily asymmetrical, and it leaves US tariffs on imported EU goods at much higher levels than EU tariffs on imports from the US,' Unicredit said in a note to clients.
9.05am BST
09:05
Jakub Krupa
Good news:
Bad news: There don't seem to be many people who think it's a particularly good deal.
The framework agreement, agreed by European Commission president Ursula von der Leyen and US president Donald Trump at a late meeting in Scotland, manages to avert a damaging transatlantic trade war, imposing a 15% import tariff on most EU goods – half the threatened rate.
German chancellor Friedrich Merz focused on the fact that it managed to keep the unity of the European Union and offer some stability to businesses on both sides of the Atlantic, even if he would have liked the deal to achieve more.
Italian prime minister Giorgia Meloni said she needed to see the details of the deal to assess it further, asking questions about possible exemptions, promises of European investment and gas purchases from the US, and how to help affected industries.
French Europe minister Benjamin Haddad said that while the deal would 'bring temporary stability,' it was generally 'unbalanced,' calling the situation 'not satisfactory and … not sustainable.'
Not ideal.
Global markets responded positively, as you can see on our business live blog, but there is much more to this deal than that. It is not business as usual.
Elsewhere, I will be looking at Spain where the country's embattled prime minister Pedro Sánchez is due to give a summer press conference and the latest reports from Ukraine.
I will bring you all key updates from across Europe today.
It's Monday, 28 July 2025, it's Jakub Krupa here, and this is Europe Live.
Good morning.