EU-US trade deal slaps EU exports with shocking 15% tariffs
European Commission President Ursula von der Leyen said the agreement brings 'stability and predictability' for EU exporters. She acknowledged that while a 15% tariff is significant, it reflects the best result under current geopolitical tensions. Her remarks followed weeks of intense negotiations between EU and U.S. trade officials.
Before the deal, U.S. tariffs on EU exports averaged around 2%, varying by sector, according to World Trade Organisation (WTO) data. However, the new flat rate was considered a compromise to prevent an escalating trade war. Markets responded quickly.
Despite short-term volatility, analysts suggest the deal may offer longer-term stability. Still, some industries fear the tariff burden will weaken EU competitiveness globally. Others argue that the agreement creates a predictable baseline for future transatlantic trade talks.
On 31 July 2025, President Trump announced a 39% import tariff on Swiss goods, effective 7 August 2025. This tariff will directly impact Swiss luxury brands like Swatch and Richemont, leading to higher costs and weakening demand.
Pharmaceutical companies Novartis and Roche will also face increased pressure to reduce drug prices in the U.S. Following the announcement, the Swiss franc weakened against the U.S. dollar, and major Swiss stock indices opened lower.
Meanwhile, the Swiss-American Chamber of Commerce called the tariff move 'disappointing' but expressed hope for a future resolution.
The euro did not appreciate against the US dollar in July 2025. The exchange rate showed a slight depreciation. The euro began the month with a high of approximately $1.1810 on 1 July 2025 and ended the month at around $1.15788, with an average rate for the month of approximately $1.15863.
The South African Rand (ZAR) equivalent of these values is not included as exchange rates fluctuate daily.
The S&P 500 did not lose ground in the days following a major deal. The S&P 500 showed strong performance throughout July, rising by 2.2% over the month and posting its third consecutive month of gains.
While there was some volatility and a slight downturn at the very end of the month, the overall trend was positive, driven by strong corporate earnings, particularly in the technology sector, and a generally improved economic outlook.
The EU and US did reach a trade agreement in late July 2025. The EU made political commitments to invest $600 billion (R11.4 trillion) in the United States by 2028 and to purchase $750 billion (R14.25 trillion) worth of American energy products through 2028, with the specific intent of reducing dependency on Russian energy supplies.
These figures represent political agreements and anticipated private-sector involvement, not legally binding contracts.
Yields on European government bonds did not decline following the trade deal. Throughout July 2025, eurozone government bond yields, including the German 10-year bund, generally drifted higher.
This spike was attributed to a broadly positive growth sentiment in the Eurozone and an improving economic outlook. This rally occurred despite the European Central Bank (ECB) keeping interest rates stable in July.
German Chancellor Friedrich Merz welcomed the trade deal, stating that it prevented a 'needless escalation' in transatlantic trade relations.
However, German industry groups, such as the German Association of the Automotive Industry (VDA), expressed concern that the 15% tariff would harm Germany's export economy, costing the industry billions annually.
Hungarian Prime Minister Viktor Orban criticised von der Leyen, calling the deal 'worse than the UK's'. French Prime Minister Francois Bayrou labelled it a 'dark day' for EU sovereignty. Analysts warn the bloc may face lasting reputational and economic damage from the concessions.
Let us know by leaving a comment below, or send a WhatsApp to 060 011 021 11.
Subscribe to The South African website's newsletters and follow us on WhatsApp, Facebook, X and Bluesky for the latest news.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
eNCA
an hour ago
- eNCA
Brazil seeks WTO relief against Trump tariffs
BRASILIA - Brazil on Wednesday approached the World Trade Organization (WTO) for relief against a hefty trade tariff imposed by President Donald Trump on more than a third of US-bound exports from the Latin American powerhouse. The 50-percent tariff on several Brazilian goods went into force Wednesday over what Trump has termed a "witch hunt" against his far-right ally Jair Bolsonaro, the former president on trial for plotting a coup. Sources in the government of incumbent President Luiz Inacio Lula da Silva told AFP Brasilia had filed a request for consultations with the US mission to the WTO -- the first formal step in the trade body's dispute settlement process. Trump's latest tariff salvo raised duties on Brazil from 10 percent to 50 percent for key exports including coffee, beef and sugar. Exempt were nearly 700 other exports including civilian planes, orange juice and pulp, Brazil nuts, and some iron, steel and aluminum products. Brazil's Vice President Geraldo Alckmin previously told journalists the new tariff would apply to about 36 percent of the country's exports to the United States, equal to trade of about $14.5 billion last year. Trump's Brazil tariff is among the highest imposed on US trading partners and was framed in openly political terms, sweeping aside centuries-old trade ties and a surplus Brasilia put at $284 million last year. 'Judge and jury' In an executive order last week, the Trump administration lashed out at Brazilian officials for "unjustified criminal charges" against Bolsonaro, on trial for allegedly plotting to wrest back power after losing the 2022 presidential election to Lula. Trump's order also charged that the Lula government's recent policies and actions threatened the US economy, national security, and foreign policy. US tensions with Brazil are not likely to dissipate soon, with a Brazilian judge on Monday placing Bolsonaro under house arrest pending the outcome of his trial for contravening a social media ban. The judge, Supreme Court Justice Alexandre de Moraes, presides over Bolsonaro's trial and was himself hit with financial sanctions this week as Washington claimed he had "taken it upon himself to be judge and jury in an unlawful witch hunt." Moraes has clashed repeatedly with the far-right in Brazil, and with tech titan Elon Musk over the spread of online misinformation. Bolsonaro risks decades in prison if found guilty on the coup charges that had allegedly also included discussions to assassinate Lula and other senior officials. The tariff hike on Brazilian goods came a day before a separate wave of higher duties on dozens of economies ranging from the European Union to Taiwan. Analysts at Pantheon Macroeconomics estimate the pending increases would boost the average effective tariff rate for US imports to nearly 20 percent.
eNCA
3 hours ago
- eNCA
Trump hikes India levy as tariff deadline approaches
WASHINGTON - US President Donald Trump on Wednesday ordered steeper tariffs on Indian goods over New Delhi's continued purchase of Russian oil, opening a new front in his trade wars just hours before another wave of duties takes effect. Trump's additional 25-percent tariff on Indian goods, set to come into place in three weeks, stacks atop a separate 25-percent duty entering into force Thursday. This takes the level to 50 percent for many products. Trump's order also threatens potential penalties on other countries for "directly or indirectly importing Russian Federation oil," a key source of revenue for Moscow's war in Ukraine. But exemptions remain for goods targeted under sector-specific duties such as steel and aluminum, and categories that could be hit later, like pharmaceuticals and semiconductors. Smartphones are also among this list of exempted products for now, notably shielding Apple from a major hit as the US tech titan shifts production from China to India. India's foreign ministry condemned Trump's tariff announcement Wednesday, calling the move "unfair, unjustified and unreasonable." The ministry had previously said that India began importing from Russia as traditional supplies were diverted to Europe after the outbreak of the conflict. It noted that Washington at that time had "actively encouraged such imports by India for strengthening global energy market stability." But Trump recently ramped up pressure on India over its purchases of Russian oil, threatening new tariffs as part of a campaign to force Moscow into ending its devastating invasion of Ukraine. India's national security adviser was in Moscow on Wednesday, media in New Delhi reported, coinciding with a visit by US envoy Steve Witkoff. The latest 25-percent additional tariff is notably lower than a 100-percent level Trump floated last month when he told Russia to end its war in Ukraine within 50 days or face massive new economic sanctions. The Republican said at the time that these would be "secondary tariffs" targeting Russia's remaining trade partners, seeking to impede Moscow's ability to survive already sweeping Western sanctions. - Tariff turmoil - Trump's latest salvo targeting India came after he separately took aim at Brazil over the trial of his right-wing ally, former president Jair Bolsonaro -- who is accused of planning a coup. On Wednesday, US tariffs on various Brazilian goods surged from 10 percent to 50 percent, although broad exemptions including for orange juice and civil aircraft are expected to soften the blow. Come Thursday, a new wave of tariffs on imports from dozens of other economies, ranging from the European Union to Taiwan, is set to kick in. These updated "reciprocal" tariffs, meant to address trade practices Washington deems unfair, go as high as 41 percent for countries like Syria. Other major US trading partners face varying increases from a current 10-percent level, starting at 15 percent for economies like the EU, Japan and South Korea. Countries not targeted by these "reciprocal" tariff hikes continue facing a 10-percent US levy Trump imposed in April. Trump's plans have sparked a rush to avert the steeper duties, with Switzerland's President Karin Keller-Sutter hurrying to Washington this week ahead of the Thursday deadline. Though she secured a meeting with Secretary of State Marco Rubio, it was unclear if she would meet Trump or any top economic officials. Her Alpine country faces a 39-percent duty on many of its exports, and while its key pharmaceutical sector has been spared for now, Trump has said a potential separate tariff could eventually rise to 250 percent. Some of Trump's sweeping tariffs face legal challenges over his use of emergency economic powers, with the cases likely to ultimately reach the Supreme Court. By Beiyi Seow
The Citizen
4 hours ago
- The Citizen
US tariff an existential threat for a third of metals and engineering sector
The effect of the US tariff on South African goods could cause many job losses in the metals and engineering sector and cause companies to close. The US tariff imposed on goods from South Africa exported to the United States poses an existential threat for some companies in the metals and engineering sector, according to a survey among SEIFSA member companies that showed 33.3% of companies in this sector are affected. The US announced a 30% import tariff on South African exports that will come into effect on Friday. This development prompted widespread concern in the South African metals and engineering sector, which relies on the US for approximately 8% of its total output. The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) then conducted a snap survey across its membership base to assess the likely implications. SEIFSA received 126 responses from member companies and used it to compile an initial report on the impact of US tariffs on the metals and engineering sector. This report combines the quantitative as well as the qualitative feedback received and identifies the direct and indirect effects on companies, the market alternatives considered and notable initial perspectives emerging from the sector. ALSO READ: Act now to absorb impact of Trump tariffs on SA vehicle manufacturing sector – BLSA US tariffs in the metals and engineering sector According to the report, the self-reported exposure to the US tariffs can be categorised like this: Directly affected (revenue/job losses): 33.3% Indirectly affected (supply chain/economy): 23.8% Exploring alternative markets: 15.9% Uncertain about impact: 14.3% Unaffected: 12.7% Tafadzwa Chibanguza, CEO designate of SEIFSA, says these figures show that while not every respondent is directly exposed to the tariff, the majority anticipate either direct or cascading economic consequences which demonstrates the interconnectedness of the metals and engineering ecosystem. According to the survey, 71.1% of the respondents operate in the downstream value chain, while 13.3% operate in other value chains, 9.4% in the midstream (fabrication, processing and casting) and 6.3% upstream in metal production. Only 34.9% of the respondents export directly to the US, while 11.6% export indirectly through a value chain and 53.5% do not export to the US at all. Among those that do export to the US, 72.4% said up to 25% of their total sales are to the US, while 18.4% said it is the case for 26% to 50% of their exports, 51%-75% for 3.5% of the respondents and 76% to 100% for 5.8% of the respondents who export to the US. When the respondents were asked if they have long-term contracts with US-based customers that could be affected, 27.3% said yes, while 64.8% said no and 7.8% were not sure. Asked about their company's anticipated response or outcome as a result of the tariffs, these were their answers: What worries companies about US tariffs The respondents also gave these open-ended responses A significant number of respondents reported that the new tariffs would have severe and immediate consequences for their businesses. Many companies anticipate a dramatic drop in sales, with some stating that the US accounts for up to 20% of their turnover. The expected revenue declines are estimated at 10–20%. Several respondents indicated that if the tariffs persist, they would be forced to reduce their workforce or even close operations. In addition, some companies had to reconsider or halt planned investments. One notable case involved the redirection of equipment and production intended for the United States to another subsidiary, leading to the effective shutdown of a new South African facility. Manufacturers also expressed concerns about production uncertainty, especially where their product offerings are specifically tailored to US market demand. While some companies acknowledged the existence of alternative markets, most noted that these are limited and already under pressure. Asian suppliers, particularly from China, are aggressively pricing into African markets, making it difficult to shift exports regionally. Furthermore, protectionist policies in other countries have made export diversification even more challenging. Several companies reported a trade diversion effect, where redirected global supply chains have led to increased competition from lower-priced imports in key third markets, eroding South African competitiveness. Even companies not directly exporting to the US are bracing for spillover effects. Suppliers to exporters are anticipating reduced orders, while increased global steel prices and constrained access to key materials are expected to raise input costs. Respondents also flagged broader macroeconomic concerns, including rising inflation, decreased gross domestic product and worsening unemployment. There is a general sense of uncertainty, with companies citing delayed orders, client hesitation and investor risk aversion as immediate consequences. ALSO READ: 'It's just gone' – Trump's tariffs cost SA company R750m overnight US tariff responses from the metals and engineering sector These notable observations emerged from the responses: While some companies reported being unaffected, others described the tariffs as an existential threat, underscoring the uneven exposure within the sector. There were multiple calls for government intervention through export diversification incentives, financial support and stronger trade diplomacy. Some respondents criticised broader industrial policy frameworks, arguing that structural issues, such as high labour costs and electricity tariffs already undermined competitiveness before the tariffs were imposed. Lastly, one respondent highlighted the adverse impact on emerging green technology, noting that its unique energy-efficient product, which showed great promise, is now facing reduced demand due to the tariff-related uncertainty. Chibanguza says these responses show that the 30% US tariff is expected to have a significant and multidimensional impact on the South African metals and engineering sector. 'While not all companies are directly affected, the broader ecosystem, including suppliers, customers and competitors, face serious disruption.' ALSO READ: Concern about SA steel industry: Trump's tariffs and ArcelorMittal closure looming
