International Commerce Discussions: Motor Vehicles, Wine, and Medication, between EU and US
The U.S.-EU tariff framework, agreed upon in July 2025, has brought some clarity to the trade landscape, but uncertainties remain for exporters and investors. The deal, while avoiding a tariff escalation, is yet to be legally codified, leaving negotiations and regulatory engagement on both sides to finalize terms and implementation mechanisms.
Under the agreement, most EU exports to the United States, including automobiles, semiconductors, and pharmaceuticals, are capped at a 15% tariff. However, high tariffs of 50% remain on EU steel, aluminum, and copper, with agreed tariff rate quotas at historic export levels to moderately reduce these. The deal also includes commitments from the EU to purchase $750 billion in U.S. energy products over three years and invest $600 billion in American sectors by 2029.
The deal presents both opportunities and challenges for various industries. U.S. automakers and chip manufacturers stand to benefit from the tariff certainty, improving their export prospects to the EU. On the other hand, EU exporters benefit from capped tariffs but continue to grapple with persistent raw materials tariffs and non-tariff regulations, particularly in sectors like steel and aluminum.
The energy sector in the U.S. is expected to grow through expanded EU purchases, supporting U.S. energy leadership. Agriculture and smaller U.S. exporters may gain from efforts to reduce EU non-tariff barriers, potentially expanding market access. Industries reliant on steel, aluminum, or copper inputs might face continued cost pressures from tariffs until quotas or reductions are further negotiated.
Negotiations on exemptions for strategic products are under scrutiny. These include certain types of agricultural products, spirits, wines, aircraft, medical devices, and potentially wine. The European Commission is preparing to propose a six-month suspension of counter-tariffs, and the German Minister of Finance, Lars Klingbeil, is expected to meet with the U.S. Secretary of the Treasury, Scott Bessent, in Washington to discuss tariffs.
In the political arena, Ursula von der Leyen, President of the European Commission, may face a new motion of censure upon her return to the European Parliament, proposed by the European left and possibly joined by others. The quorum of 72 MEPs for the motion to topple von der Leyen is within reach. The Democratic Party is being called upon to help topple von der Leyen with their 21 signatures by an MEP from the Five Star Movement, Pasquale Tridico.
The U.S. president, Donald Trump, has raised up to $152 million so far with the tariffs introduced in April, approximately double the amount from the same fiscal period last year. The White House's Trade Representative, Jamieson Greer, declared that the tariffs are practically definitive and should not be negotiated immediately. However, one American negotiator considered it legitimate to use tariffs for geopolitical reasons.
The current tariff framework reduces the risk of an escalating tariff war, promotes significant transatlantic investment, and establishes a baseline for future tariff reductions while preserving some protection for sensitive sectors. Nonetheless, the deal’s provisional nature means industries should monitor upcoming regulatory and negotiation developments closely.
- The tariff framework in the U.S.-EU deal has created a 15% tariff cap on EU exports like automobiles, semiconductors, and pharmaceuticals, while maintaining high tariffs on steel, aluminum, and copper. However, the energy sector and EU exporters face challenges from persisting raw materials tariffs and non-tariff regulations.
- In the political arena, the European Commission is preparing to propose a six-month suspension of counter-tariffs, and the German Minister of Finance, Lars Klingbeil, is expected to meet with the U.S. Secretary of the Treasury, Scott Bessent, to discuss tariffs. Meanwhile, Ursula von der Leyen, President of the European Commission, may face a new motion of censure upon her return to the European Parliament.
