In a major development, President Donald Trump on Sunday revealed that the United States and the European Union have finally agreed on a comprehensive trade deal, only days before a 30 per cent tariff on European imports would go into effect.
Following intense negotiations in Scotland's Turnberry with European Commission President Ursula von der Leyen, the two leaders unveiled a new trading framework that will prevent a full-fledged transatlantic trade war. The agreement, CNN reports, welcomed by both sides as 'powerful' and 'historic', focuses on new tariffs, massive energy buys, and heavy investment pledges.
As per the terms of the deal, the EU will buy $750 billion in US energy, representing a huge increase in transatlantic energy cooperation. Further, the 27-member group has pledged to invest $600 billion more in the US than it is currently doing, according to another CNBC report.
The report further stated that in return, Trump has promised to apply a 15 per cent tariff on the majority of European imports into the US, reduced from the 30 per cent rate he initially proposed. The agreement is set to greatly reduce trade tensions between the longtime allies.
A CNBC report quoted Donald Trump declaring that this was a “very big deal, biggest of all” as he stood alongside von der Leyen. Meanwhile, the European Commission chief, speaking after the meeting, acknowledged the difficulty of the talks and said, “It is a good deal, it is a huge deal, with tough negotiations.”
The deal came in at the eleventh hour before the August 1 deadline, after which the Trump administration had threatened to increase tariffs on nearly all EU imports from 10 per cent to 30 per cent. US Commerce Secretary Howard Lutnick had emphasized earlier in the day that Washington was not going to offer any more extensions, terming the deadline as 'firm', CNN reported.
If the negotiations had broken down, Brussels would have been ready to introduce a large counter-tariff package of US exports and make use of its new Anti-Coercion Instrument, a legislative tool aimed at resisting economic pressure.
The US-EU trade relationship is one of the world's largest, totaling close to $1.97 trillion in 2024, both goods and services. The EU had a goods trade surplus but experienced a services deficit, with a net $58.7 billion surplus with the US.
Trump continuously condemned the imbalance and employed it to defend stricter trade terms. "The US and EU have one of the biggest trade deficits," he had said, justifying the imposition of tariffs as a negotiating power.
