US-EU deal sets 15% tariff on most goods and averts threat of trade war

The United States and the European Union have agreed to a trade deal setting a 15% tariff on most goods, US President Donald Trump announced, staving off higher import taxes on both sides that might have sent shockwaves through economies around the world.

The announcement came after Mr Trump and European Commission chief Ursula von der Leyen met briefly at Mr Trump’s Turnberry golf course in Scotland.

Their private meeting was a culmination of months of bargaining, with the White House deadline of August 1 approaching for imposing punishing tariffs on the 27-member EU.

“It was a very interesting negotiation. I think it’s going to be great for both parties,” Mr Trump said.

The agreement, he said, was “a good deal for everybody” and “a giant deal with lots of countries”.

Ms von der Leyen said the deal “will bring stability, it will bring predictability that’s very important for our businesses on both sides of the Atlantic”.

Trump said the EU had agreed to buy some 750 billion dollars’ (£558bn) worth of US energy and to invest 600 billion dollars (£446bn) more in America, as well as making a major purchase of military equipment.

Mr Trump played golf at his Trump Turnberry golf course in South Ayrshire (Jane Barlow/PA). PA Media

The US leader said: “We are agreeing that the tariff straight across for automobiles and everything else will be a straight across tariff of 15%.

“We have a tariff of 15%. We have the opening up of all of the European countries.”

Ms von der Leyen said the 15% tariffs were “across the board, all inclusive” and that “indeed, basically the European market is open”.

Before the meeting began, Trump pledged to change what he characterised as “a very one-sided transaction, very unfair to the United States”.

“I think both sides want to see fairness,” the Republican President told reporters.

His EU Commission counterpart spoke of rebalancing. Ms von der Leyen said the US and EU combined have the world’s largest trade volume, encompassing hundreds of millions of people and trillions of dollars. She added that Mr Trump was “known as a tough negotiator and dealmaker”.

“But fair,” Trump added.

For months, Trump has threatened most of the world with large tariffs in hopes of shrinking major US trade deficits with many key trading partners.

More recently, he had hinted that any deal with the EU would have to “buy down” the currently scheduled tariff rate of 30%.

During his comments before the deal was announced, he pointed to a recent US agreement with Japan that set tariff rates for many goods at 15% and suggested the EU could agree to something similar.

Asked then if he would be willing to accept tariff rates lower than that, Mr Trump said “no”.

Joining Ms von der Leyen were Maros Sefcovic, the EU’s chief trade negotiator; Bjorn Seibert, the head of von der Leyen’s Cabinet; Sabine Weyand, the commission’s directorate-general for trade, and Tomas Baert, head of trade and agriculture at the EU’s delegation to the US.

The US and EU seemed close to a deal earlier this month, but Mr Trump instead threatened the 30% tariff rate. The deadline for the Trump administration to begin imposing tariffs has shifted in recent weeks but is now firm, the administration insists.

“No extensions, no more grace periods. August 1, the tariffs are set, they’ll go into place, Customs will start collecting the money and off we go,” US commerce secretary Howard Lutnick told Fox News on Sunday.

He added, however, that even after that “people can still talk to President Trump. I mean, he’s always willing to listen”.

Without an agreement, the EU said it was prepared to retaliate with tariffs on hundreds of American products, ranging from beef and car parts to beer and Boeing planes.

If Trump eventually followed through on his threat of tariffs against Europe, it could have made everything from French cheese and Italian leather goods to German electronics and Spanish pharmaceuticals more expensive in the United States.