US and EU clinch deal with broad 15% tariffs on EU goods to avert trade war
The announcement came after European Commission President Ursula von der Leyen travelled for talks with US President Donald Trump at his golf course in western Scotland to push a hard-fought deal over the line.
"I think this is the biggest deal ever made," Trump told reporters after an hour-long meeting with von der Leyen, who said the 15% tariff applied "across the board".
"We have a trade deal between the two largest economies in the world, and it's a big deal. It's a huge deal. It will bring stability. It will bring predictability," she said.
The deal, that also includes $600 billion of EU investments in the United States and significant EU purchases of U.S. energy and military equipment, will indeed bring clarity for EU companies.
However, the baseline tariff of 15% will be seen by many in Europe as a poor outcome compared to the initial European ambition of a zero-for-zero tariff deal, although it is better than the threatened 30% rate.
The deal mirrors parts of the framework agreement the United States clinched with Japan last week.
"We are agreeing that the tariff... for automobiles and everything else will be a straight across tariff of 15%," Trump said. However, the 15% baseline rate would not apply to steel and aluminium, for which a 50% tariff would remain in place.
Trump, who is seeking to reorder the global economy and reduce decades-old U.S. trade deficits, has so far reeled in agreements with Britain, Japan, Indonesia and Vietnam, although his administration has failed to deliver on a promise of "90 deals in 90 days."
He has periodically railed against the European Union saying it was "formed to screw the United States" on trade.
Arriving in Scotland, Trump said that the EU wanted "to make a deal very badly" and said, as he met von der Leyen, that Europe had been "very unfair to the United States".
His main bugbear is the US merchandise trade deficit with the EU, which in 2024 reached $235 billion, according to US Census Bureau data. The EU points to the US surplus in services, which it says partially redresses the balance. Trump also talked on Sunday about the "hundreds of billions of dollars" that tariffs were bringing in.
On July 12, Trump threatened to apply a 30% tariff on imports from the EU starting on August 1, after weeks of negotiations with the major US trading partners failed to reach a comprehensive trade deal.
The EU had prepared countertariffs on 93 billion euros ($109 billion) of US goods in the event there was no deal and Trump had pressed ahead with 30% tariffs.
Some member states had also pushed for the bloc to use its most powerful trade weapon, the anti-coercion instrument, to target US services in the event of a no-deal.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
TimesLIVE
an hour ago
- TimesLIVE
Audi cuts forecast over US tariffs and restructuring costs
German carmaker Volkswagen's premium brand Audi lowered its full-year financial guidance on Monday, citing the impact of higher US import tariffs and ongoing restructuring costs. The Ingolstadt-based company expects revenue of between €65bn (R1,355,406,000,000) and €70bn (R1,459,560,200,000), down from its previous forecast of €67.5bn (R1,407,537,000,000) to €72.5bn (R1,511,687,350,000). Audi also cut its operating margin forecast to 5% to 7%, compared to the earlier range of 7% to 9%. Audi said it is assessing the implications of the trade deal reached between the US and the EU on Sunday. The agreement set a 15% baseline US tariff on imports from the EU, including cars, which had previously faced customs duties of 27.5%. "Should the 15% tariff stay in place long-term, it would put Audi at a competitive disadvantage because its key peers have a more pronounced US production footprint," said Fabio Hoelscher, an analyst from Warburg Research. Audi is among the carmakers most exposed to US tariffs as it has no manufacturing facilities in the US. Though the deal provides clarity on the new tariff regime, enabling better operational and strategic planning, the 15% rate represents a structural shift from the 2.5% rate before US President Donald Trump took office, said Pal Skirta, equity analyst from Metzler Equities. That leaves German carmakers facing persistently higher US tariffs on their exports and long-term competitiveness challenges, he said. The Volkswagen Group also cut its full-year guidance on Friday after taking a $1.5bn (R26,781,448,350) tariff hit in the first half of the year. Global carmakers have booked billions of losses and some issued profit warnings due to US import tariffs. The European industry is also facing stiffening competition from China and domestic regulations aimed at speeding up the electric-vehicle transition.
eNCA
an hour ago
- eNCA
Battling tariffs is no trivial pursuit for US games retailer
ANNAPOLIS - At a strip mall in Maryland, a miniature landscape extends across a table between Dash Krempel and his friend as a war game unfolds. But their hobby is becoming more expensive as US tariffs take a toll. Krempel told AFP the cost of models for tabletop games have surged from inflation, and continued rising since US President Donald Trump imposed sweeping tariffs on trading partners this year. UK-made figurines that cost $60 around three years ago now go for $94.50, he said. "Prices have gotten bigger," he added. "It's a very expensive hobby to begin with, so it's maybe pricing a lot of people out." Instead of buying more products, he now tries to support retailer Game Kastle College Park by renting tables to play in-store. For the shop's owner, Boyd Stephenson, stocking new board games, paints and hobby supplies has only become more challenging. To avoid the harshest of Trump's tariffs, some suppliers had to delay shipments or postpone new releases. As they raised their suggested retail prices, so has Stephenson at Game Kastle. About a fifth of his store's products have seen cost hikes, with increases ranging from 5 percent to 20 percent. "If we see higher prices or higher tariffs, I'm going to see higher wholesale prices, and then I have to raise my prices accordingly," he said. Asked what percentage of his store relies on imports, Stephenson replied: "Almost all of it." - No capacity - AFP | SAUL LOEB Stephenson estimates some 7,000 board games were released last year from 5,000 different companies. "You're really looking at 5,000 different approaches (to tariffs)," he said. "Some producers are saying, 'We're going to eat the cost.' Some producers are saying, 'We're passing the cost through all the way.' And other producers are doing some sort of mix of that." Like other US retailers, Stephenson could face more cost pressures come August 1, when steeper tariffs are set to hit dozens of economies like the European Union and India. The elevated rates mark an increase from the 10 percent levy Trump imposed on goods from most economies in April. AFP | SAUL LOEB While China -- a crucial manufacturing hub for games -- is temporarily spared, Trump has separately imposed fresh 30 percent tariffs on products from the world's second biggest economy this year. US tariffs on Chinese products could return to higher levels from August 12 if officials fail to extend their truce. Yet, there is no quick fix to return manufacturing to the United States. "US manufacturers just don't have the capacity to do that anymore," said Stephenson, showing an intricate board game figurine. "Really, the people that are good at that, that's China," he said. "The best modeling paints come from Spain." "So if you see tariffs get put up on the EU, then all of a sudden I'm going to have to pay higher prices on modelling paint when I bring it into the country," he added. Trump has threatened the bloc with a 30 percent tariff. - 'Universally bad' - AFP | SAUL LOEB Stephenson tries to absorb some cost hikes, but said: "I have to be able to pay the staff, pay the electric company, pay the landlord." Trump's on-again, off-again approach to duties has also made suppliers' price changes more unpredictable. "What is always universally bad for business is uncertainty," Stephenson said. He usually stocks up on inventory ahead of the year-end holiday season, but expects to be more strategic with purchases this year to avoid unwelcome surprises. Many companies are delaying merchandise imports as they lack certainty, said Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation. "When the product is brought into the country and entered into commerce, you have 15 days to pay your tariff bill," he said. This causes problems when tariff rates change and businesses lack funds to pay for orders. Some businesses, and industry group the Game Manufacturers Association, have mounted legal challenges against Trump's blanket tariffs hitting various countries, noting nearly 80 percent of tabletop games sold in the US are made abroad. But such complaints are an uphill battle. "The damage, especially for small retailers, has been significant," Gold said. by Beiyi Seow
IOL News
2 hours ago
- IOL News
The 30% U. S. tariff and Its global ripple effects
On August 1, the United States will impose a 30% tariff on select South African exports, a move the Trump administration frames as a corrective to trade imbalances but which South Africa decries as a unilateral overreach. President Cyril Ramaphosa has rejected the U.S. justification, noting that 77% of U.S. goods enter South Africa duty-free, with an average tariff of just 7.6%. Yet, the policy threatens to derail South Africa's fragile economic recovery, destabilise global supply chains, and escalate protectionist tensions worldwide. South Africa will be hit with a 30% tariff on all its exports to the United States from August 1, following a formal letter from US President Donald Trump to President Cyril Ramaphosa demanding action on trade imbalances and long-standing market restrictions. This article examines the tariff's sectoral impacts, systemic risks to multilateral trade, and strategic responses to mitigate the fallout. South Africa's automotive sector, a beneficiary of the African Growth and Opportunity Act (AGOA), faces existential risk. Reuters reported that the U.S. absorbed 6.5% of South Africa's vehicle exports (worth $1.8 billion in 2024) and is a critical market for manufacturers like BMW and Ford. The 30% tariff could force plant closures and mass layoffs, eroding a sector contributing 5.2% to GDP. The U.S. accounts for 5–6% of South Africa's citrus exports ($100 million annually), supporting 35,000 jobs. Tariffs may cede market share to Chile and Peru. Wine: Producers are scrambling to redirect stock or absorb price shocks, but the U.S. market's premium margins are irreplaceable. High-value perishables face logistical hurdles in pivoting to new markets swiftly. The textile sector may lose competitiveness in the U.S., while aluminum exports face a $534.5 million risk, with 24.6% going to the U.S. Furthermore, the South African Reserve Bank warns of 0.3% GDP contraction and 100,000 job losses. Fiscal strain from reduced export revenues and a weaker rand. The tariffs will disrupt global logistics: Freight bottlenecks: A pre-tariff rush to ship goods to the U.S. has already caused 6–10-week delays on routes like China and South Africa. Cost inflation: U.S. consumers will pay more for South African goods, while businesses face redundant inventory and working capital crunches. The U.S. has threatened an additional 10% tariff on BRICS-aligned nations, politicizing trade. South Africa may expand its exports by increasing trade with markets in the EU and Asia. The trade deal reached on July 27, between the United States and the European Union will ease tariff barriers and improve market access between the two economies. For South Africa, this development could have significant ramifications. First, EU exporters may displace South African goods in U.S. markets, particularly in competitive sectors like wine, citrus, and manufactured components. Second, the EU may divert more of its exports to the U.S., limiting the space for South African exports to expand into Europe. Unless offset by diplomatic interventions and aggressive trade diversification, this deal risks marginalizing South Africa in both the U.S. and EU markets simultaneously. To navigate the crisis, South Africa must leverage trade finance tools: Export Credit Facilities: Bridge cash flow gaps for exporters facing margin compression. The U.S. tariffs are a stress test for South Africa's economic resilience. While the short-term pain is inevitable, strategic diplomacy, trade finance innovation, and market diversification could transform this threat into an opportunity for long-term resilience. The world will watch whether South Africa and the global trading system can adapt without fracturing further. Nyaniso Qwesha, MBA, is a trade finance consultant with expertise in global commerce and risk management. He advises clients on trade policy, market access, and financial solutions in emerging economies.
