Lutnick stated that pharmaceuticals and cars are key sectors in the trade agreement with the EU. The Trump administration will announce 'substantial' tariffs on non-U.S. produced drugs within the next two weeks; the work to set global reciprocal tariffs will be completed by August 1. Media reports indicate that the U.S. and EU are seeking to finalize a joint statement by August 1, outlining some of the agreement's content, after which the U.S. will lower tariffs for specific industries.
The latest remarks by Commerce Secretary Lutnick indicate that the US-EU trade agreement negotiations are not yet complete. Despite reaching a preliminary framework agreement, significant discussions are still required in several key areas, including digital services tax and steel and aluminum trade.
According to Xinhua News Agency, on Sunday, July 27, local time in Scotland, US President Donald Trump and European Commission President Ursula von der Leyen jointly announced a new trade agreement between the US and the EU. The US will impose a 15% tariff on EU imports, while the EU will increase its investment in the US by $600 billion and purchase $750 billion worth of US Energy and other products.
On Tuesday, July 29, Eastern Time, Lutnick told the media that he had spoken with EU officials that morning to discuss the future negotiation agenda. The EU's digital services tax policy targeting US technology companies will be a key focus of the negotiations, as well as the trade in steel and aluminum products, which were not included in the current agreement.
This statement indicates that, despite the preliminary framework agreement reached by Trump and von der Leyen over the weekend, there is still significant uncertainty in several key areas. These unresolved issues may affect investors' confidence in the stability of the US-EU trade relationship.
The US and the EU will discuss the digital services tax and steel and aluminum trade issues.
In an interview with the media, Lutnick was candid, stating: 'There is still a lot of bargaining to be done.' He expects to continue communicating with EU trade officials to discuss the digital services tax and other issues. Lutnick said:
'Do I expect to continue communicating with trade officials from the European Commission? Yes, they called me this morning to discuss what else needs to be talked about, such as digital services, taxes, and the attacks on our (US) technology companies—these issues will all be on the table for discussion.'
Furthermore, Lutnick stated that the EU hopes to include steel and aluminum in the discussions. These products are currently not covered by the agreement.
On Tuesday, another media outlet reported that an EU official disclosed that the EU is pushing for a quota system for exporting metal products, which would reduce U.S. tariffs on specific quantities of EU metal imports. Currently, EU metal exports face a high tariff of 50%.
Pharmaceuticals and the automotive industry are key to the agreement
Lutnick pointed out in the interview that the pharmaceutical and automotive industries are crucial areas for reaching a trade agreement with the EU. "The Europeans are key to the agreement because of the automotive and pharmaceutical sectors," he explained.
Regarding the pharmaceutical industry, Lutnick stated that the Trump administration will announce its pharmaceutical tariff policy in the next two weeks, imposing a 'massive' tariff on non-U.S.-produced drugs. He said:
"If you do not produce drugs in the U.S., you will have to pay a massive tariff. … Since we are paying for your drugs, you should be producing them in the U.S."
The U.S. and EU seek to finalize a joint statement by August 1st, clarifying parts of the agreement
On Tuesday, media outlets cited an EU official as saying that both the U.S. and the EU are seeking to finalize a non-binding joint statement by August 1st, further clarifying some of the content agreed upon during last weekend's negotiations. Once the statement is finalized, the U.S. will begin reducing tariffs on specific EU industries.
According to CCTV News, Commission President Ursula von der Leyen stated on Sunday that, under the current circumstances, a 15% tariff level is the best outcome the European Commission could achieve. She confirmed that the agreement sets a uniform 15% tariff for the automotive industry. She also verified that the EU and the US have reached an agreement in the pharmaceutical industry, implementing a uniform 15% tariff rate. She acknowledged that the EU and the US have not yet made a decision on the spirits sector, and the details of the trade agreement framework signed that day will be announced in the coming weeks.
CCTV mentioned that, in explaining some of the decisions in the trade negotiations, von der Leyen noted that the EU is still overly dependent on Russian liquefied natural gas. Therefore, importing more affordable liquefied natural gas from the US is very welcome.
However, the market is skeptical about whether the EU can fulfill its commitment to purchase $750 billion worth of US energy over three years. Last year, the EU imported less than $80 billion worth of energy from the US, making the new target a significant challenge.
Set global reciprocal tariffs by August 1
Lutnick confirmed on Tuesday that August 1 is the date set by the Trump administration to establish all reciprocal tariffs, which will then be "formally implemented."
He pointed out that the US and China, with which it is currently in talks, have different timelines. For other countries, the US will complete the setting of reciprocal tariffs by August 1, this Friday.
"We have our own team working with China. They have their own matters. But for the rest of the world, we will complete everything by Friday."
According to Xinhua News Agency, from July 28 to 29, He Lifeng, the Chinese lead negotiator and Vice Premier of the State Council, met with US Treasury Secretary Bessent and Trade Representative Griller in Stockholm, Sweden, for Sino-US economic and trade talks. Based on the consensus reached during the talks, both sides will continue to extend the suspension of the 24% reciprocal tariffs imposed by the US and the corresponding countermeasures by China for 90 days.
Editor/Rocky