Source: Wall Street News, compiled from CCTV News
Trump stated that the EU will increase its investment in the US by $600 billion, purchase US military equipment, and buy $750 billion worth of US energy products. The steel and aluminum tariffs will remain unchanged, and the US will make significant efforts in the chip sector. Commerce Secretary Lutnick said that the US will determine its chip tariff policy within two weeks; the EU will open its $20 trillion market and for the first time fully accept US automotive and industrial standards. Von der Leyen stated that a unified 15% tariff will be applied to both the automotive and pharmaceutical industries, with no decision made yet on the spirits sector. The Chairman of the European Parliament's Trade Committee said that the US-EU trade agreement is severely imbalanced and detrimental to European interests. Finland's Minister for Foreign Trade and Development stated that the US-EU trade agreement is not worth celebrating, as tariffs remain high. The German business community criticized the US-EU trade framework agreement.
US and EU reach a trade agreement
On July 27, US President Trump announced that the US has reached a 15% tariff agreement with the EU. Trump stated that the EU will increase its investment in the US by $600 billion, purchase US military equipment, and buy $750 billion worth of US energy products. Trump noted that the tariffs on steel and aluminum will remain unchanged, and energy is a key part of this agreement. The agreement will benefit the automotive industry, and agriculture will also be significantly impacted. The US will make significant efforts in the chip sector, and the UK Prime Minister is pleased with the agreement.
Commerce Secretary Lutnick stated that the US will determine its chip tariff policy within two weeks.
Trump stated that the US is considering reaching agreements with three or four other countries. Most of these agreements will involve set tariffs, and the US will maintain low tariffs for other countries. Countries will receive clarification or confirmation letters in the coming week, with the confirmation letters regarding tariffs to be sent out by August 1.
European Commission President von der Leyen stated that the EU and the US have agreed to a uniform 15% tariff rate, which will apply to all goods, including cars. Von der Leyen noted that these trade agreements with the US will bring stability to the market.
von der Leyen: A 15% tariff is the best result the Commission could achieve.
On the 27th, following the announcement of a major trade agreement between the European Union and the United States by President Trump, European Commission President Ursula von der Leyen provided an explanation for some of the decisions made during the trade negotiations with the U.S.
Von der Leyen stated that the EU is still overly dependent on Russian liquefied natural gas. Therefore, importing more affordable liquefied natural gas from the U.S. is very welcome.
Regarding tariff arrangements, von der Leyen confirmed that the agreement sets a uniform 15% tariff rate for the automotive industry. She noted that, under the current circumstances, a 15% tariff level is the best result the Commission could achieve.
Additionally, she confirmed that the EU and the U.S. have also reached an agreement in the pharmaceutical industry, implementing a uniform 15% tariff rate. Von der Leyen acknowledged that no decision has been made yet regarding the spirits sector, and details of the trade agreement framework signed on that day will be released over the next few weeks.
U.S. Commerce Secretary Lutnick: EU to Open Its $20 Trillion Market
On July 27, Commerce Secretary Lutnick posted on his social media, stating that President Trump has opened the door to one of the world's largest economies. The EU will open its $20 trillion market and fully accept U.S. automotive and industrial standards for the first time.
Furthermore, the EU will purchase $750 billion worth of energy products from the U.S. and invest $600 billion in the U.S. Tariffs on EU products exported to the U.S. will be set at 15% across the board.
Senior EU officials: The US-EU trade agreement is severely imbalanced and detrimental to European interests.
On the 27th, following the announcement of a new trade agreement between the United States and the European Union, Bernd Lange, Chairman of the European Parliament's Committee on International Trade, expressed strong dissatisfaction with the agreement, stating that it is neither satisfactory nor in line with Europe's fundamental interests.
Lange pointed out that this is a biased agreement. He argued that while a uniform tax rate of 15% brings a certain level of predictability and legal security to trade relations, overall, the agreement is far from balanced and may cause long-term harm to Europe. Lange stated that the Commission's additional commitment to invest $600 billion in the U.S. and the large-scale procurement of American military technology are not conducive to employment and industrial development in Europe.
Lange further criticized the agreement, stating that it not only weakens the EU's economic strength but also mirrors the Trump administration's practice of using tariffs to 'extort' countries like Japan.
Lange emphasized that the agreement is not a mutually beneficial trade cooperation but rather a one-sided concession. He also noted that the U.S. Treasury Secretary announced that the new tariffs have generated $27 billion in revenue for the U.S. Lange said that the real intention of the U.S. is to generate revenue through tariffs, and the outcome of these negotiations cannot be considered a victory for the EU's interests, nor is it a commendable diplomatic achievement.
Finnish Minister for Foreign Trade and Development says the US-EU trade agreement is not worth celebrating; tariffs remain high
Regarding the latest trade agreement between the EU and the U.S., Finnish Minister for Foreign Trade and Development Ville Skinnari stated on the 27th that although the agreement has calmed the situation, there is no reason to celebrate as the tariff levels remain high. 'In the long run, this may not be a very sustainable agreement, but we will wait and see.'
Skinnari stated that he expects the European Commission to provide detailed information about the content of the agreement and the views of EU member states. Skinnari noted that due to the tariff negotiations initiated by the Trump administration, global trade policy has become quite tense, leading to instability in global trade.
German business community criticizes the EU-US trade framework agreement
On the 27th, the European Union and the United States reached a framework agreement on their trade issues. According to the agreement, the U.S. will impose a uniform 15% tariff on most EU imports. In response, criticism from the German business community has been widespread.
According to calculations by the Kiel Institute for the World Economy (IfW), a 15% universal tariff, along with higher tariffs on steel and aluminum, would lead to a 0.15% decline in Germany's GDP within a year, equivalent to a reduction of 6.5 billion euros, while the overall EU GDP would decrease by 0.1%.
Julian Hinz, Head of the Center for Trade Policy at the Kiel Institute for the World Economy, sharply criticized the 15% tariff agreement, calling it a “bad deal” that is “hardly different from the 30% tariff threat by the Trump administration.” He emphasized: “To undermine the rules-based global trading system for this purpose, I consider a major strategic mistake.”
Hinz further warned that even a 15% agreement would “come at the cost of undermining the authority of the WTO, which is undoubtedly the wrong direction in the long run.” He suggested that the EU should form an alliance with like-minded countries such as Canada, Mexico, Brazil, and South Korea, rather than being picked off one by one by the U.S. “This way, we can gain significant leverage in Washington,” thereby effectively countering the tariff threats.
The initial reaction from the German business community was also far from relieved. Dirk Jandura, President of the Federation of German Wholesale, Foreign Trade, and Services (BGA), stated, “This agreement is a painful compromise. Every percentage point of the tariff is too much. These additional tariffs pose a survival threat to many of our businesses.” He called it “a heavy blow to foreign trade.”
Wolfgang Niedermark, a member of the Executive Board of the Federation of German Industries (BDI), pointed out: “This agreement is an insufficient compromise that sends a dangerous signal to the closely intertwined economies on both sides of the Atlantic.” The EU had to bear the cost of high tariffs to reach an agreement with the U.S. Even a 15% tariff rate will have a significant negative impact on Germany’s export-oriented industry.
Johannes Gerhardt, Chief Economist of the German Engineering Federation (VDMA), noted: “A 15% U.S. tariff will significantly weaken the competitiveness of German machinery and equipment manufacturing, especially for those companies that compete directly with U.S. suppliers.” A survey by the association showed that under a 10% tariff rate, 43% of companies already believed their competitiveness would be “strongly” or “very strongly” affected. Gerhardt warned: “A 15% tariff is clearly in the danger range.”
In a commentary titled ‘Europe Surrenders to Trump in Tariff Dispute—At a High Cost’ published in Handelsblatt, it was argued that “trade relations between the two major Western economic blocs will become more difficult and costly. This will harm both the U.S. and Europe, both in the short and long term. Ursula von der Leyen once mentioned that the transatlantic relationship needs a necessary rebalancing. This adjustment has now become a reality, but the balance is clearly tipping against Europe.”
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Editor/Jeffy