US, EU Strike Landmark 15% Tariff Deal Sidestepping Trade War
The United States and the European Union have reached a sweeping trade framework agreement establishing a 15% reciprocal tariff on most traded goods, announced jointly by President Donald Trump and European Commission President Ursula von der Leyen in Scotland on 27 July 2025.
The deal, framed by Trump as "the biggest deal ever made," outlines broad EU commitments across energy, foreign investment, and defense procurement. Under the deal, the United States will:
- apply a 15% reciprocal tariff on most EU-origin goods, including automobiles, semiconductors, and pharmaceuticals;
- maintain existing elevated duties of 50% on steel and aluminum, with plans to shift to a quota-based system;
- exempt strategic sectors from tariffs under a "zero-for-zero" structure, covering aircraft parts, certain chemicals, semiconductor equipment, selected agricultural goods, and critical raw materials; and
- continue cooperation with the European Union on defense procurement, including expected purchases of hundreds of billions of dollars in US-made military equipment.
The European Union will:
- purchase USD 750 billion in US energy products over 3 years, including liquefied natural gas (LNG), crude oil, and nuclear fuels, contributing to its energy diversification strategy;
- invest an additional USD 600 billion into the United States, directed toward industrial, digital, and infrastructure sectors;
- support zero-tariff access for US products in strategic categories named above;
- participate in joint efforts on steel overcapacity, environmental standards, and digital trade governance; and
- improve market access and data flow mechanisms to align with US digital trade goals.
In her 27 July 2025 statement, President von der Leyen confirmed that the 15% tariff rate would apply to the "vast majority of EU exports," and described the rate as "a clear ceiling" that brings clarity for EU citizens and businesses. She also affirmed that the "zero-for-zero" exemptions would be expanded in future negotiations.
The agreement comes amid the broader "Liberation Day" trade policy overhaul launched by the Trump administration on 2 April 2025 (seeTrump Administration Rolls Out Sweeping 10% General Tariff on All Imports, Reciprocal Elevated Duties Targeting EU, 53 Other Countries (3 April 2025)). That framework imposed a 10% general tariff on all imports and elevated tariffs on countries with large trade surpluses or non-reciprocal trade practices.
The European Union had faced the prospect of tariffs as high as 30% on automobiles, pharmaceuticals, and electronics beginning 1 August 2025 (seeUnited States Hits EU, Mexico with 30% Tariff in Latest Trade Crackdown (14 July 2025)). This new agreement effectively replaces those planned escalations with a lower, mutually applied 15% rate and opens the door to future negotiations on further reductions. It also aligns with rate recently agreed to with Japan (White House Confirms Reduced Tariffs in Japan Trade Deal, Confirms 15% Rate and USD 550 Billion Investment (24 July 2025) and United States Drops Japan Tariff to 15% in 'Largest Ever' Trade Deal (23 July 2025)).
The agreement comes on the heels of the July NATO summit and is seen by both parties as a second cornerstone in rebuilding the transatlantic economic and security relationship. The United States and European Union together account for over USD 1.7 trillion in annual trade and 44% of global GDP.
Final legal review and procedural steps are expected in the coming weeks. While no executive order or legal text has yet been released, both parties have committed to codifying the framework through domestic instruments and future bilateral dialogues.
The IBFD will continue monitoring legislative developments, tariff schedules, and trade enforcement changes stemming from this framework.