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Irish Examiner
a day ago
- Business
- Irish Examiner
John O'Brien: EU capitulation to US in trade deal shows weakness of the bloc
The EU has agreed a trade deal with the US that forces us to trade on worse terms than before. Increased tariffs on exports will make European products less competitive in the US market with a corresponding drop in sales, profits and jobs. This is expected to reduce GDP by 0.5% over the medium term. Financial markets reacted by selling the euro, signalling not only that it is a bad for economic growth but worse than expected. The nature of the negotiation is as damaging as the result. The EU commission, and Ursula von der Leyen in particular, capitulated to US demands, making significant concessions getting nothing in return. The negotiations did not need to go this way. The EU, the world's third largest economy and the US's largest export market, had the ability to hurt the US. Member states had given the commission powerful negotiating team tools. They agreed a targeted package of counter-tariffs on €93 billion of US exports to the bloc. The Anti-Coercion Instrument provides a legal framework for massive and wide-ranging counter measures, in particular against services, where the US has a significant surplus with the EU. The optimal outcome to retaliation would be a US retreat, either immediately or after negative market reaction, the infamous TACO trade ("Trump always chickens out"). Small concessions could be sold as a major victory to the domestic audience. This approach comes with a big risk, if the US does not back down, with escalating tariffs leading a full-blown trade war. This would cause significant economic harm to both sides, sufficient for the EU to enter a recession. The end game in this scenario is a fairer deal, following significant pain on both sides. The commission has chosen the low risk accepting a bad deal in return for stability, in the context of annual growth expectations of between 1-1.5%, a loss of 0.5% will not cause a recession. However, it is difficult to see the long-term plan from the EU. The trade commissioner, Maros Šefčovič, suggested that is the start of a process leading to a broader, more equal agreement in future, possible after a change of administration. Future administrations will have little incentive to renegotiate a deal tilted so much in their favour once a treaty is signed. The commission may be playing for time, recognising that Europe is in a poor position to deal with economic recession while contributing to the defence of Ukraine. In this scenario, we can expect extended negotiations to delay signing a treaty and locking in the new tariffs. The key selling point is a stable business environment, but this may be more mirage than reality. Even describing the agreement as a trade deal is misleading. It is little more than a memorandum of understanding between politicians; the commission refers to it as a framework for negotiation. Outside the tariffs, many points remain vague, such as the aspiration to reduce non-tariff barriers. It will not become a trade deal until the treaty is signed, and much can go wrong between now and then. Any business planning on the basis of 15% and done could be getting a nasty surprise before the end of the year. A formal trade agreement needs to be ratified by member states in the EU and congress in the US. The French prime minister has strongly condemned the deal, while Germany has been lukewarm at best. Ratification remains likely but not certain. No congress, whatever its composition, is likely to reject a deal so favourable to the US. The US may increase demands having seen the EU weakness. The administration has made clear its desire to bring the pharmaceutical industry home and is currently reviewing its options. Any effort to strip the industry from the deal will likely result in counter measures. Trump has been vocal about getting access to international markets for American beef, demands for access will cross a European red line on food safety and could escalate quickly. EU weakness The worse effects will be long-term, not directly from the deal, but the manner of negotiation. The deference to the US and capitulation to its demands will cost the EU prestige and credibility in international relations. It has projected weakness in surrendering to economic threats and accepting a one-sided deal and this will be noted globally. It has shown unwillingness to accept short term pain for long-term benefit, China and Russia will be particularly interested in this. Special pleading on areas of national interest such as wine (France), cars (Germany) or IT Services (Ireland) has shown it is possible to follow a divide and conquer strategy in negotiations with the EU. Collective bargaining on trade is presented as one of the key benefits of the EU and the poor outcome has boosted Eurosceptic groups. Populist and far-right parties have been quick to criticise the commission. Victor Orban has focused on the commission's weakness while both National Rally (France) and AfD (Germany) have been vocal critics. The inability of the commission to match the UK's 10% tariff gives ammunition to these groups. The America First disengagement from global affairs has created a leadership vacuum, and an opportunity for the EU. It could have taken a leadership position with a principled rejection of the bullying US demands. Instead, it submitted, making it harder for smaller countries to negotiate fair trade. The impact on Ireland Ireland's economy will suffer along with Europe as exports become less competitive in the US. However, we have more reason than most to be thankful that the commission has chosen the safe route. The Irish economic model has created an economy dependent on foreign direct investment – primarily from the US and centred on pharmaceuticals and technology. These sectors are now as important to the economy as the construction industry at the peak of the property bubble. Ireland would see a significant recession in the event of a trade war. The economy will face a double hit as high US tariffs significantly reduce pharmaceutical and other exports, while European counter measures on US technology companies would hit employment in and corporate tax from the many companies headquartered in Ireland. It is no surprise the Taoiseach, Tánaiste and a collection of ministers have been lining up to support the agreement. This is not a new vulnerability and should not be dismissed as the consequence of a uniquely erratic US administration. John O'Brien: 'The commission may be playing for time, recognising that Europe is in a poor position to deal with economic recession while contributing to the defence of Ukraine.' Repatriation of Irish-based US companies' profits has been an issue for administrations on both sides of the political divide, since at least the presidency of Barack Obama. The biggest gain for Ireland is if the near miss, so far, on a damaging trade war jolts our politicians out of complacency and into action to rebalancing the economy. In the shorter term, the government and business must prepare for a break down in the agreement. The situation around pharmaceuticals is not stable, agriculture exports are vulnerable to fall-out from moves to open Europe to US agricultural products. Businesses operating across the island of Ireland will be disrupted by different tariff rates between north and south, with unpredictable results. Ireland, like most EU governments, seem happy to accept a one-sided deal that brings an appearance of stability and avoids a damaging trade war in the short-term. Unfortunately, this comes with a long-term cost of a loss of prestige and influence and a missed opportunity to take a greater role in global leadership. John O'Brien is lecturer in the department of accounting and finance, Cork University Business School
Irish Times
30-07-2025
- Business
- Irish Times
Letters to the Editor, July 30th: On tariffs, jobs and houses, protest voices, and bargain cycle lanes
Sir, – Early days to assess the EU/US proposed trade deal but one thing is clear. The EU side has made major concessions. They have accepted a 15 per cent tariff on most exports from the EU to the US, but no similar tariffs must apply to US exports to the EU. Under the deal, the EU has also agreed to invest $600 billion in the US economy and to buy $750 billion of energy from the US over the next three years. No similar commitments apply it seems on the US side. This outcome partly reflects the difficulty of getting sufficient agreement among member states on a tougher stance to be taken by the EU, Ireland being one of the main countries opposed to adopting a stronger EU position and thereby weakening the overall EU negotiating stance. READ MORE A much bigger issue though is the unstated (in public) threat of the US withdrawing its security guarantees for Europe, something almost unthinkable before the present administration came to power. The consequences of this for Ukraine and Europe (including Ireland) would be incalculable and worth avoiding, if necessary, by making major concessions on the trade front. From a US viewpoint, a reasonable expectation perhaps given its commitment of equipment and personnel to European defence. Until Europe is less dependent on the US to guarantee its security, it will have a weak bargaining hand when it comes to trade. – Yours, etc, JOHN O'HAGAN, Department of Economics, Trinity College, Dublin. Sir, – Faced with the threat of 30 per cent US tariffs, the EU blinked. To shield its economy – notably the German and French car industries in my opinion – it settled for 15 per cent across-the-board tariffs and to boot, tossed in a few more sweeteners to American firms. Whatever became of the much-touted Anti-Coercion Instrument, the EU's so-called 'big bazooka'? The Irish Government, meanwhile, has put a sunny gloss on the deal – especially regarding pharmaceuticals. Yet Trump has made it plain, pharmaceuticals is next in his sights, and the agreement itself is vague. When the day comes, I'd be surprised if our EU partners show much solidarity with Ireland's pharma sector, given past criticism of the tax incentives to lure it here in the first instance. Yes, EU leaders faced a dilemma. But the leverage wasn't all entirely with America. US trade with the EU exceeds $600 billion annually, dwarfing the projected $90 billion in tariff revenue. The EU may have deemed it impolitic to press that point – but I've no qualms about confronting economic aggression. I'll be steering clear of overpriced coffee, fizzy drinks, forgettable burgers, and smartphones still awaiting meaningful AI – not to mention FSD cars that still need drivers. If dollars speak louder than diplomacy, let mine do the talking. – Yours, etc, JOHN McCRORY, Lucan, Dublin. Sir, – I read with interest the response of different European leaders to the proposed EU-US trade agreement. Let's call a spade a spade. US president Donald Trump's bullying tactics have worked to such an extent that some leaders now consider 15 per cent tariffs on EU goods to the US a successful outcome. The tariffs on many US goods to EU will be zero. Reciprocal rates how are you? – Yours, etc, BRIAN MANGAN, Ferns, Co Wexford. Sir, – I see that as part of the tariff agreement, Europe will purchase $600billion of US armaments. Presumably this will largely eliminate the large US deficit (in goods). If/when this happens will the one-sided tariffs fall away? Clearly, that von der Leyen one is a fearsome negotiator. – Yours, etc, BRIAN MURPHY Carrickmines Wood, Dublin 18. Sir, – Relief at the conclusion of an EU-US trade deal is understandable but to me it seems premature. Europe has made a huge concession to the United States and got nothing in return. Giving way to a bully is never a wise move as the likelihood is they will only come back for more. –Yours, etc, RONAN MURPHY, Greystones, Co Wicklow. Investment, housing and jobs Sir, – I too agree with Michael Gilmartin (July 26th) and Enda Scanlon (July 28th). Ireland has focused on attracting ever more inward investment over many years without weighing up the cost. It has become clear that these large multinationals are now the ones calling the shots and the current impetus to improve infrastructure appears to reflect their demands to a greater extent than those of our own citizens. How did we end up giving 50 per cent of our power supplies to data centres in Dublin? Ireland is a small country. We seem to think that our limited natural resources are inexhaustible. They are not. Our focus on financial wealth has resulted in rapid population growth. This has put overwhelming stress on our land, our water, our nature and our biodiversity. It is making daily life more challenging and putting decent housing out of reach of so many. – Yours, etc, CAROL SCOTT, Shankill, Dublin 18. Dancing feet Sir, – There is an old Irish phrase: 'Up here for thinking, down there for dancing'. Michael Flatley should stick to the dancing. – Yours, etc, TONY CORCORAN, Rathfarnham Dublin 14 Voices of protest on Gaza Sir, – Chris Fitzpatrick has correctly pointed out (Letters, July 28th) that Israel's campaign in Gaza in response to the appalling Hamas attack of October 7th has become, in its ferocity and forced starvation, a travesty of the Judaism that the ruling coalition government pretends to represent. But his impression that there are no Jewish voices of protest is not correct. Among the Jewish lobbies that have long opposed Israel's stance and advocated the two-state solution are Britain's Jews for Justice for Palestinians, who march in the current London demonstrations, and the Europe-wide network, JCall. The American equivalent, JStreet, is increasingly influential. Earlier this week, the American Jewish Committee, along with the Reform Movement, the largest Jewish denomination in America, issued statements declaring Israel 'culpable' in its Gaza campaign. In Israel this week, the prominent Jewish human rights organisation, B'Tselem, and the Physicians for Human Rights Israel both specifically labelled Israel's actions as 'genocide'. Former Israeli prime ministers, Ehud Barak and Ehud Olmert, in print and in television interviews, have characterised Israel's Gaza campaign as war crimes. And Israel's liberal daily newspaper Ha'aretz continues to report with total honesty on events in Gaza and the West Bank, and carries every day several op-ed pieces which nothing in these islands can rival for vituperation. Why is all this so little known? Perhaps partly because in newsworthiness it cannot compete with stories of bombing and starvation; and partly because it can make no impression whatever on a regime that is blind to all but its fanatical fantasies. Only determined action by the international powers might have an effect. But, rhetoric aside, I suspect they may be too distracted by presidents Trump and Putin to get around to that. – Yours, etc, LOUIS MARCUS, Dublin 16. Sir, –I was troubled by two letters published on July 28th that, while expressing concern about Gaza, shifted focus on to Jews around the world, urging them to speak out or risk complicity. This places moral coercion on Jews solely because of their identity – something we should not accept, and indeed don't accept, when applied to other groups. Criticism of Israeli policy is not only legitimate, it is regularly voiced by Israelis and Jews globally, including many who strongly support the country. But when Jews are called upon to denounce Israel solely because they are Jewish, it echoes a troubling pattern. One letter also quotes Jewish scripture to suggest Jews have failed their own values: a rhetorical move with a long and damaging history in Christian Europe, even if unfamiliar to many Irish readers. Definitions of anti-Semitism used by the Irish Government and leading academics distinguish clearly between criticism of Israel and collective blame of Jews. I hope future letters will reflect that distinction. – Yours, etc, YOTAM GARDI, Inchicore, Dublin 8. Sir, – Sally Hayden's article 'From a viewing platform in Israel, ' war tourists' pay to see Gaza's ruins,' (July 28th) is an example of investigative journalism at its best. The Israeli mindset is now so far down the rabbit hole of ethnic cleansing it beggars belief. Even the last line where one of the complaints, from people coming to view the carnage, consisted of the potholes on the road leading to the viewing platform! – Yours, etc, JUDY BURKE, Rosscarbery, Co Cork. Sir, – In 1847, at the height of the Irish famine, Charles Villiers, the Earl of Clarendon, was appointed the Lord Lieutenant of Ireland. He arrived during the second year of the Great Hunger. His reports on the scale of the crisis were regularly discounted by a government that deferred to the permanent head of the Treasury, Sir Charles Trevelyan. Despairing of effective famine relief, Clarendon suggested to the prime minister, Lord Russell, that 'there is not another legislature in Europe that would disregard such suffering as now exists in the west of Ireland or coldly persist in a policy of extermination'. Unfortunately, had Villiers been writing today about Gaza, the word 'genocide' would replace 'extermination' and every legislature in Europe would, in fact, be guilty of disregarding such suffering! – Yours, etc, COLIN P DOHERTY, Head of School of Medicine, Trinity College Dublin 2. Bargain cycle lanes Sir, – Olga Barry asks if the €45 million allocation for the 6km cycle lane between Dundrum and Dún Laoghaire will make it the most expensive cycle lane ever built in Ireland (Letters, July 28th). In fact that dubious record surely goes to the 6km cycle lane between Clontarf and Connolly Station which cost an astonishing €70 million to complete before it opened last year, after two years of endless disruption to local residents. The Dundrum to Dún Laoghaire project would appear to be a bargain by comparison. – Yours, etc, BARRY WALSH Clontarf, Dublin 3. The BBC and radio silence Sir, – Well, the BBC have done it! They have taken away BBC's Radio Three and Four, unless one is living in the UK. As an Irish person who has listened to these stations all my life I am feeling bereft. How that leaves the millions of British citizens around the world I can only imagine, and I wonder why on earth this decision has been made. From a purely selfish viewpoint I shall miss these stations terribly during the day. For the summer one looks forward to the Proms on Radio Three, and now I shall have to do without them. With failing eyesight I watch very little television and anyway my love of radio has always superseded any other form of entertainment. Oh BBC, what were you thinking of? – Yours, etc, ITA McCORMACK, Maynooth, Co Kildare. Diamond cutters Sir – Sunday's All Ireland football final was a wonderful occasion but who came up with the idea that the diamond patterned cutting of the grass was a good idea? For those of us watching on TV, and doubtless for those on the upper tiers of the stand, the pattern was confusing and headache-inducing. – Yours, etc, JOHN MacKENNA, Royal Oak, Co Carlow. Busy busy, must fly Sir, – As the manager of a unit in a large organisation, one of the ways in which I judged the enthusiasm of the members of my team was the speed with which they walked down a corridor. ( 'The greatest part of any job is learning to look busy, ' July 26th). Those who walked slowly were rarely upgraded to positions of responsibility. –Yours, etc, FINBAR KEARNS, Piercestown, Co Wexford. Lucia Joyce and Carl Jung Sir, – It was nice to see modern dancer Lucia Joyce, who was celebrated as 'l'Irlandaise' in 1920s Paris, make an appearance in Frank McNally's Diary (July 25th) celebrating Carl Jung's 150th birthday on July 26th. Lucia, who described Jung as 'that big fat Swiss Man trying to get hold of my soul', would have turned 118 on the same day. The cult psychotherapist must have got a shock when this cosmic coincidence of birth dawned on him. He too suffered from psychosis, like his mother. He also wrote of his own fear of 'doing a schizophrenia', and boasted two personalities (his own contemporary self, and Zarathustra). Could his dismissal of Lucia's lost poetry as 'psychotic', therefore be considered a case of kettle calling the pot black? James Joyce considered the same writing to be 'anticipations of a new literature'. As for Lucia's 'diagnosis', she had as many as she had doctors. One concluded: 'Whatever it is she will soon get over it.' Whatever the correct diagnosis, Lucia certainly was an artist ahead of her time, in the wrong gender, and ultimately had to pay the price of definitive incarceration and erasure. We can't turn the clock back, but on her 118th birthday, why not reclaim her legacy as a groundbreaking artist, who struggled perhaps with at least as many mental health challenges as the widely celebrated big old fat Swiss man who failed to get hold of her soul. – Yours, etc, DEIRDRE MULROONEY, Lower Grand Canal Street, Dublin 2.
Express Tribune
28-07-2025
- Business
- Express Tribune
Tariff threat forces EU to hedge bets
Listen to article Barely months into Donald Trump's return to power, America's global standing has been bleeding credibility at a staggering pace, forcing many nations to prepare for a post-American world as tariff theatrics rattle the world. The American president's decision to impose a sweeping 30% tariff on EU exports has ruptured the fragile scaffolding of trust that long upheld the US-EU relationship. Although Europe has repeatedly aligned itself with Washington, often to the bewilderment of its own citizens, it appears to be showing signs of hedging its bets. EU allies, long and strangely willing to toe the American line on so-called "common" security and economic interests, are beginning to scramble for cover from Washington's whims, as the facade of shared purpose wears thin. The push for self-reliance is beginning to forge a rare moment of cohesion in the EU, finding an alternative to the disunity that marked the Brexit years. The shift was plain when European Commission President Ursula von der Leyen, while signing a cooperation pledge with Japan recently, remarked that the EU was now seeking "more reliable partners" to counter economic coercion and unfair trade practices — a barbed formulation that conspicuously sidesteps the US. Timing, too, is everything. The EU has yet to clinch a free trade deal with Washington, and the sudden tariff spike has landed like a hammer blow amid delicate negotiations with a looming deadline set by Washington. However, Europe's response is not simply reactive. European officials warned that such a tariff would "practically prohibit" transatlantic trade and inflict deep damage on economies that export over 20% of their goods to the US, with Germany alone sending over $174.5 billion worth of products in 2024. Brussels activated a first wave of counter-tariffs, suspended only until August 6, covering €21 billion of US goods. A second package, initially targeting €95 billion, was whittled down through fierce internal lobbying to €72 billion, sparing items like diagnostic reagents, semiconductor-manufacturing machines and key medical devices deemed too critical to Europe's own supply chains. Anti-Coercion Instrument Meanwhile, EU diplomats quietly dusted off their most potent, never-used tool: the Anti-Coercion Instrument (ACI). Designed in 2023 to deter economic blackmail, the ACI can impose duties, quotas, investment restrictions and limits on public procurement against any country that "coerces" EU members. Where WTO courts have failed, the mechanism allows qualified majority action — 15 states representing 65% of the EU population — circumventing the need for unanimity. Analysts observe that just floating the ACI sends a powerful signal: Europe is done being a passive victim of trade bullying. Germany, once cautious about escalation, now publicly supports considering the ACI. France has long championed it. Even Italy's far-right leadership, initially tipped to cosy up to Trump, has resisted side deals and endorsed a firm, collective stance. The recent EU-Japan pledge to deepen cooperation was one sign of the recalibration. So too is the EU's intensified internal debate over "strategic autonomy", a term that gained currency after Trump's earlier attacks on Nato and withdrawal from key international agreements. The sentiment was even more audible in the Spanish prime minister's recent statement. At a business forum in Paraguay, he not only decried the US for "unfounded and unfair" measures, but also proposed using retaliatory funds to create an EU solidarity fund for affected industries. Similarly, Denmark reported a record 74% public trust in the EU — up from 63% five years ago — crediting a shared sense of resisting external coercion. Earlier this month, the UK, still navigating post-Brexit independence, joined the WTO's interim appeals mechanism (excluding the US) to safeguard its ability to challenge future trade distortions. Asian allies are likewise on edge: Singapore's defence minister lamented that the US has shifted "from liberator... to a landlord seeking rent". Strategic autonomy A decade ago, the talk of "strategic autonomy" in Brussels elicited polite nods and little action. Today, it has become doctrine. In a recent interview with BBC, German Chancellor Friedrich Merz declared that Europe can no longer be a free rider on US security guarantees, announcing stepped-up defence spending and trilateral security dialogues with France and the UK (the so-called E3). Together, the UK, Germany and France are working on a triangular alliance of major European powers, which Merz says will focus not just on security and foreign policy but on economic growth as well. France and Germany have extended joint procurement plans, while Spain and Italy have explored loosening Nato's centrality in favour of EU-driven defence cooperation. Similarly, Spain and the Netherlands, once sceptical of EU defence, now champion flexibility in EU budget rules to fund military modernisation. Even before taking office, the German chancellor had made waves on the night of his election victory by declaring that the Trump administration was "largely indifferent to the fate of Europe". Asked in the BBC interview whether his view had shifted, he responded that it had not, noting that Trump was "not as clear and as committed as former US presidents were, former US administrations were". Observers point out that European defence budgets, long kept low relative to GDP, are now under political pressure to rise. The EU's joint procurement loan facility — €150 billion in shared borrowing — aims to accelerate drone and artillery acquisitions. An Institute for Global Affairs (Eurasia Group) report finds that Western Europeans are urging their leaders to "stand up to Trump" and even seek partial autonomy from Washington. Even before Trump's return, think tanks were noting how Washington's browbeating of Europe and Latin America was prompting those regions to forge independent arrangements — from a European "army of Europe" to new Asian trade pacts — to hedge against US caprice. One Pew report found that in the past year, only 27% of Europeans have confidence in Trump and fear is growing that a faltering US will neglect Nato and other security guarantees. Remarkably, the 2025 Democracy Perception Index shows China overtaking the US as the world's most positively viewed major power. Beijing is now negotiating a standalone climate pact with the EU. Analysts calculate that Chinese clean tech exports reduced global emissions by roughly 1% in 2024, strengthening Beijing's claim to climate leadership. Latin American nations are doing the same. Brazil, fresh from calling US tariffs "overtly political", established a new Brazilian tax office in Beijing — only the fifth of its kind — signalling where Rio now sees its most dependable partner. The old trust in American stewardship is obsolete, and Europe's halting steps toward strategic autonomy and the assertive postures of others show that a shared resolve to envision a world without Uncle Sam's shield is gaining momentum. The writer is a Lahore-based senior journalist
West Australian
27-07-2025
- Business
- West Australian
US President Donald Trump announces EU trade deal with 15 per cent tariffs
President Donald Trump announced Sunday that the US reached a trade deal with the European Union, following pivotal discussions with European Commission President Ursula von der Leyen days before the August 1 tariff deadline. Mr Trump said that the deal imposes a 15 per cent tariff on most European goods to the US, including cars. Some products, including aircrafts and their components, some chemicals and pharmaceuticals, will not be subject to tariffs, Ms von der Leyen said in a briefing after the agreement was announced. She also said that the new 15 per cent tariff rate would not be added to any tariffs already in effect. The 15 per cent tariff rate is lower than the 30 per cent rate Mr Trump had previously threatened against the United States' largest trading partner, but higher than the 10% baseline tariffs the EU was hoping for. Mr Trump said that the 27-member bloc also agreed to purchase $750 billion ($1.1 trillion) worth of US energy and invest an additional $600 billion worth of investments into the US above current levels. He said that the bloc would also be 'purchasing hundreds of billions of dollars worth of military equipment,' but did not provide a specific dollar amount. 'It's a very powerful deal, it's a very big deal, it's the biggest of all the deals,' Mr Trump said Sunday alongside Ms von der Leyen. 'It's a good deal, it's a huge deal, with tough negotiations,' Ms von der Leyen said after the meeting. While questions remain about the specific details and timeline of the EU investments, the agreement marks a pivotal moment for Mr Trump, following weeks of uncertainty surrounding the US-EU trade talks. Mr Trump during a press conference before his meeting with the European leader said that there was a 50-50 chance they would reach a framework of a deal. Brussels had been preparing for a no-deal scenario if the trade talks devolved ahead of August 1. Lawmakers had approved a major package of counter-tariffs, which would have targeted a range of US goods. The bloc also considered deploying the EU's 'Anti-Coercion Instrument,' a move seen as the trading bloc's 'trade bazooka.' Ireland's Prime Minister said the agreement 'brings clarity and predictability to the trading relationship between the EU and the US,' according to a statement. 'It does mean that there will now be higher tariffs than there have been and this will have an impact on trade between the EU and the US, making it more expensive and more challenging,' Ireland's Department of the Taoiseach said. Still, the agreement 'creates a new era of stability,' the statement continued. The US-EU trade relationship was valued at 1.68 trillion euros when taking into account both services and goods trading in 2024, according to the European Council. While the EU recorded a surplus on goods trading, it noted a deficit in the services realm. This left the EU with an overall trade surplus of around 50 billion euros with the US last year.
Hindustan Times
27-07-2025
- Business
- Hindustan Times
Explained: Donald Trump's landmark $1.35 trillion trade deal with EU before tariff deadline
In a significant breakthrough, President Donald Trump on Sunday announced that the United States and the European Union have reached a comprehensive trade deal, just days before a 30 per cent tariff on European imports was due to take effect. U.S. President Donald Trump and European Commission President Ursula von der Leyen announced a trade deal between the US and the EU.(REUTERS) After high-stakes negotiations in Scotland's Turnberry with European Commission President Ursula von der Leyen, the two leaders revealed a new trade framework aimed at averting a full-blown transatlantic trade war. The deal, according to CNN, hailed by both sides as 'powerful' and 'historic', centers around new tariffs, large-scale energy purchases, and significant investment commitments. Also read: Donald Trump turns up to play golf amid protests against his Scotland trip What does the US-EU deal include? Under the terms of the agreement, the EU will purchase $750 billion worth of US energy, marking a massive expansion in transatlantic energy cooperation. Additionally, the 27-member bloc has committed to investing $600 billion more into the US than its current levels, stated another CNBC report. The report added that in exchange, Trump has agreed to impose a 15 per cent tariff on most European imports to the US, down from the 30 per cent rate he previously announced. The deal is expected to significantly ease trade tensions between the long-time allies. A CNBC report quoted Donald Trump declaring that this was a 'very big deal, biggest of all' as he stood alongside von der Leyen. Meanwhile, the European Commission chief, speaking after the meeting, acknowledged the difficulty of the talks and said, 'It is a good deal, it is a huge deal, with tough negotiations.' Donald Trump-EU deal impact The agreement was finalized just before the August 1 deadline, after which the Trump administration had vowed to raise tariffs on most EU goods from 10 per cent to 30 per cent. Earlier in the day, US Commerce Secretary Howard Lutnick had reaffirmed that Washington would not give further extensions, calling the deadline 'firm', reported CNN. Had the talks collapsed, Brussels was prepared to launch a major counter-tariff package targeting a wide range of US exports and invoke its new Anti-Coercion Instrument, a legislative mechanism designed to push back against economic pressure. Also read: Trump says US will work with Thailand and Cambodia, adds both 'want to settle' A fractured trade relationship The US-EU trade relationship is among the world's largest, valued at nearly $1.97 trillion in 2024, including both goods and services. While the EU ran a goods trade surplus, it faced a deficit in services, resulting in an overall $58.7 billion surplus with the US. Trump repeatedly criticized the imbalance and used it to justify tougher trade terms. 'The US and EU have one of the largest trade deficits,' he had said, defending the imposition of tariffs as leverage. FAQs What is the latest trade deal Trump announced? Trump and EU President Ursula von der Leyen finalized a deal where the EU will buy $750 billion in US energy and invest $600 billion more into the country in exchange for lower tariffs. Why was this deal considered urgent? It came just days before Trump was set to increase tariffs on European imports from 10 per cent to 30 per cent on August 1. What was at stake in the US–EU trade balance? The EU had a $58 billion overall surplus with the US in 2023, mainly due to goods exports, prompting Trump to demand fairer trade terms. What other trade deals has the Trump administration secured? The administration has renegotiated NAFTA (now USMCA), reached agreements with Japan and South Korea, and imposed tariffs on China during its broader trade overhaul. What is the proposed new tariff structure? Instead of the planned 30 per cent hike, the new deal imposes a 15 per cent across-the-board tariff on most EU imports. What are the key risks or criticisms? Critics argue the deal may strain diplomatic ties, shift costs to consumers, and provoke retaliation from other trading partners not offered similar terms.
