US-EU trade deal criticised by German business leaders and French minister

The Guardian

28-07-2025

The US-EU trade deal clinched in a ballroom at Donald Trump's golf resort in Scotland on Sunday has been criticised by business leaders in Germany and by a French government minister.
The deal, which will impose 15% tariffs on almost all European exports to the US including cars, ends the threat of a punitive 30% import duties being imposed on Trump's 1 August deadline for a deal, but it is a world apart from the zero-zero import and export tariff the EU offered initially.
It also means European exporters to the US will face more then triple the average 4.8% tariff they now pay, with negotiations to continue on steel which is still facing a 50% tariff, aviation, and a question mark over future barriers to pharmaceutical exports.
The German chancellor, Friedrich Merz, rapidly hailed the deal, saying it avoided 'needless escalation in transatlantic trade relations' and averted a potentially damaging trade war.
But German exporters were less enthusiastic. The powerful BDI federation of industrial groups said the accord would have 'considerable negative repercussions', while the country's VCI chemical trade association said the accord left rates 'too high'.
It is also clear that the US tariff of 15% on automotive products will place a burden on German automotive companies in the midst of their transformation, hitting sales and profits.
The president of the car industry federation VDA, Hildegard Müller, said it was 'fundamentally positive' that a framework deal was agreed but warned of huge costs to come.
European stock markets rallied at the start of trading on Monday, amid relief that a deal had been reached. Germany's Dax jumped by 0.86%, and France's Cac 40 index rose by 1.1%.
Ireland, one of the EU's top exporters to the US, said on Sunday it welcomed the deal for bringing 'a measure of much-needed certainty', but that it 'regrets' the baseline tariff, in a statement by its deputy prime minister, Simon Harris.
France's minister for Europe, Benjamin Haddad, said on Monday that the agreement would provide 'temporary stability … but it is unbalanced'.
The German bank Berenberg said the deal brought the 'crippling uncertainty' to an end but said it was a victory for Trump.
'It is great to have a deal. In two major respects, however, the outcome remains much worse than the situation before Trump started his new round of trade wars early this year,' said Holger Schmieding, Berenberg's chief economist.
'The extra US tariffs will hurt both the US and the EU. For Europe, the damage is mostly frontloaded,' Schmieding said in a note to clients on Monday morning.
'The deal is asymmetric. The US gets away with a substantial increase in its tariffs on imports from the EU and has secured further EU concessions to boot. In his apparent zero-sum mentality, Trump can claim that as a 'win' for him,' Schmieding added.
The Italian bank UniCredit also said Trump had got the better out of the EU.
'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.
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'Fifteen per cent is not to be underestimated, but it is the best we could get,' the European Commision president, Ursula von der Leyen, acknowledged.
Initially the EU had tried to hardball the US by threatening but pausing €21bn (£18bn) worth of retaliatory measures in April, and adding another list of €73bn worth of US imports that would be taxed earlier this month.
But it pivoted to a quick UK-style deal after the Nato summit in June, swapping a comprehensive trade deal for security and defence promises from Trump.
By contrast, China, which threatened the US with a cascade of punitive tariffs, is still negotiating with Trump, who over the weekend froze technology transfer restrictions to create space for a deal with Beijing.
Berenberg said the deal would impact the German economy, but the decline in growth would be offset by the Bundestag's recent growth stimulus package, it added.
The EU had pushed for a compromise on steel that could allow a certain quota into the US before tariffs would apply.
Trump appeared to rule that out, saying steel was 'staying the way it is', but von der Leyen insisted later that 'tariffs will be cut and a quota system will be put in place' for steel.
He also ruled out a carve-out for pharmaceuticals but later von der Leyen said the 15% tariff would apply to EU medicine exports and that any other tariffs were up to the US president.
The EU is now subject to a 25% levy on cars, 50% on steel and aluminium, and an across-the-board tariff of 10%, which Washington had threatened to increase to 30% in a no-deal scenario.
The bloc had been pushing hard for tariff carve-outs for critical industries from aircraft to spirits, and its car industry, crucial for France and Germany, is already reeling from the levies imposed so far.