Trade agreement EU and the US – less bad is not necessarily good

15% on most US imports from the EU

Shortly before the deadline set by the Trump administration expired, the EU and the US agreed yesterday on a framework trade deal. According to the agreement, imports from the EU to the US will be subject to a 15% tariff in future, although according to the President of the European Commission, this will include the tariffs imposed on various products prior to Trump's presidency, meaning that the average effective tariff rate is likely to increase by less. Car exports, which are particularly important from a German perspective, will also be subject to a 15% tariff in the future. Only steel, aluminum, and related products will continue to be subject to 50% tariffs in the future. No tariffs will be imposed on specific products such as aircraft parts, certain pharmaceutical products (generic drugs), and certain chemical products. In addition, the EU has committed to purchasing fossile fuels from the US worth €750 billion and to investing €600 billion in the US. Part of the agreement is apparently also that the EU will refrain from taking countermeasures against the higher US tariffs.

Much remains unclear

As with the agreements between the US and the UK and Japan, many details remain unclear. For example, there has been no confirmation from the US side that the 15% actually includes tariffs that were already in place before Trump took office. Furthermore, it is not clear which products are included in the “certain” chemicals and pharmaceutical products (generic drugs). Last but not least, it remains unclear who will purchase the additional energy sources from the US and who will invest the €600 billion in the US. It will certainly not be the EU Commission.

For full text see attached PDF-Version.