TURNBERRY, Scotland – On Sunday, July 27, 2025, the US and the EU agreed a framework trade agreement that put a 15% tax on most EU goods that came into the US. This arrangement, which US President Donald Trump and European Commission President Ursula von der Leyen announced at Trump’s fancy golf course in western Scotland, stops a bigger trade war between the two key partners, who together account for about a third of global commerce.
After months of hard discussions, the deal was reached just days before the U.S. was slated to impose a 30% tariff on August 1.
Trump told reporters, “I think this is the biggest deal ever made.” He praised the EU’s promises to spend about $600 billion in the US and buy a lot more US energy and military equipment. Trump said that this pact, which comes after a $550 billion deal with Japan last week, would improve relations between the U.S. and Europe after years of what he called unjust treatment of U.S. exporters.
Von der Leyen called Trump a “tough negotiator” and said that the 15% tariff would apply “across the board.” She subsequently told reporters that it was “the best we could get.” She stressed how important the pact was by saying, “It’s a big deal that we have a trade deal between the two biggest economies in the world.” It’s a big thing. It will make everything more stable. It will make things more predictable.
The deal is mostly in line with the framework agreement that the U.S. and Japan agreed before, but there are still some issues that need to be worked out, especially when it comes to duties on spirits. The deal, which Trump said includes “hundreds of billions of dollars” in arms purchases and $750 billion in EU purchases of US energy over the next few years, is likely to help several EU companies, such as Airbus, Mercedes-Benz, and Novo Nordisk, if all requirements are met.
Friedrich Merz, the Chancellor of Germany, was happy with the arrangement because it stopped a trade war that would have hurt Germany’s economy, which is heavily reliant on exports and has a large automotive sector. The current 27.5% U.S. duty on automobile and parts imports hurt German carmakers like VW, Mercedes, and BMW the most. Now, for many imports, the levy will be cut to 15%.
But several people in Europe had doubts. Bernd Lange, a German Social Democrat who is in charge of the European Parliament’s trade committee, said that the tariffs were still unfair and that the EU’s large investment in the U.S. would end up costing the EU more than it was worth. A high-ranking official in the U.S. government said that Trump can still raise tariffs in the future if European countries don’t keep their promises to invest.
Within an hour of the accord being announced, the euro rose by about 0.2% against the dollar, pound, and yen. This was the first reaction from the market.
The 15% tax applies to most commodities, such as semiconductors and drugs, but there are certain important exceptions. The U.S. will keep its 50% tax on steel and aluminum, but von der Leyen said that a quota system could eventually take its place. Talks on this are still going on. Von der Leyen also said that there would be no tariffs on airplanes and aviation parts, some chemicals, generic pharmaceuticals, semiconductor equipment, some agricultural items, natural resources, and vital raw materials from either side. “We will continue to strive for the inclusion of more products in this list,” she stated, noting ongoing discussions about spirits.
U.S. officials said that the EU had also agreed to cut non-tariff barriers for cars and some agricultural items. However, EU officials said that the details of these standards were still being worked out. Non-tariff barriers are rules that make it harder to import or export goods without directly taxing them. Examples include import limits, licensing requirements, or high product standards.
The U.S. Census Bureau says that the trade deficit in goods with the EU reached $235.6 billion in 2024. Trump has always been against this. In response, the EU often points to the U.S. excess in services trade as a way to make up for this imbalance.
President Trump has been trying to change the way the world economy works and cut down on long-standing U.S. trade deficits. This pact will probably be seen as a big win for him. He has already made such framework agreements with Vietnam, Japan, Indonesia, and Britain.