The White House announced this week a “Cooperation Agreement on Reciprocal, Fair, and Balanced Trade” with the European Union, which it called “a generational modernization of the transatlantic alliance.” However, no official documents have yet been released regarding this agreement, which apparently still remains to be formally negotiated, and the two sides have offered occasionally conflicting accounts of what will be included.
Tariffs. Beginning Aug. 1 the U.S. will impose a single 15 percent tariff (down from the 30 percent President Trump had threatened) on “the vast majority” of imports from the EU. EU President Ursula von der Leyen said this tariff “is a clear ceiling” and that there will be “no stacking” with other U.S. tariffs.
The European Commission explained that for U.S. most-favored-nation tariffs that exceed 15 percent, only the MFN rate will be assessed. The Commission added that the 15 percent rate will apply to automobiles and auto parts (down from the current 25 percent) as well as “any potential future” tariffs, including Section 232 tariffs, on pharmaceuticals and semiconductors (which will remain subject only to U.S. MFN duty rates until any such tariffs are announced).
The EU asserted that as of Aug. 1 both sides will reduce to zero their tariffs on “a number of strategic products,” including “all aircraft and component parts, certain chemicals, certain generics, semiconductor equipment, certain agricultural products, natural resources and critical raw materials,” and that efforts will be made to “add more products to this list.” The White House made no mention of any such measures.
The U.S. said it will continue to levy its 50 percent Section 232 tariffs on imports of steel, aluminum, and copper from the EU. Von der Leyen, however, said these “tariffs will be cut” and that “a quota system will be put in place.” EU trade commissioner Maroš Šefčovič added that the agreement “sees clear prospects of joint action on steel, aluminium, copper and their derivatives … effectively creating a joint ringfence around our respective economies through tariff rate quotas at historic levels with preferential treatment.”
The EU said it will eliminate its remaining, “already low” MFN duties on industrial goods from the U.S.
Rules of Origin. The U.S. said the agreement will include strong rules of origin “to ensure that the benefits of this agreement flow directly to the United States and the European Union, not to third countries.”
Trade Barriers. According to the U.S., the EU committed to further work to address “a range of U.S. concerns related to various EU requirements that are burdensome to U.S. exporters,” non-tariff barriers affecting trade in food and agricultural products (e.g., streamlining requirements for sanitary certificates for U.S. pork and dairy products), and “unjustified digital trade barriers.”
Other. The U.S. asserted that the EU will make $600 billion worth of investments in the U.S. over the next three years, although press reports noted that EU authorities have no actual authority over private-sector investment decisions. The U.S. also claimed that the EU will purchase $750 billion in U.S. energy by 2028; the EU said only that its purchases of U.S. liquefied natural gas, oil, and nuclear fuels will be “significant” and will help reduce EU reliance on Russian gas and oil.
The U.S. also highlighted efforts to (1) take complementary actions to address the non-market policies of third parties and (2) cooperate on inbound and outbound investment reviews, export controls, and duty evasion.
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