JAKARTA – The United States reached a trade framework agreement with the European Union on Sunday, charging a 15 percent import rate for most European Union goods, half of the original fare and preventing a larger trade war between two allies who control nearly a third of global trade.
That was announced by US President Donald Trump and European Commission President Ursula von der Leyen on President Trump’s luxury golf course in western Scotland, after an hour-long meeting pushing for the agreement that was fought so hard that it was completed.
“I think this is the biggest deal ever made,” President Trump told reporters, praising the EU’s plans to invest about 600 billion US dollars in Uncle Sam’s country and dramatically increasing the purchase of US military energy and equipment.
President Trump said the deal, which surpassed a $550 billion deal signed with Japan last week, would expand relations between the two trans-Atlantic powers after years of experiencing what he called unfair treatment of US exporters.
Meanwhile, Von der Leyen, who described Trump as a formidable negotiator, said a 15 percent tariff was applied “in a thorough manner”, then told reporters it was “the best we could get.”
“We have a trade agreement between the two largest economies in the world, and this is a huge deal. This is a very big deal. This will bring stability. This will bring predictability,” he said.
The deal, which President Trump says requires US $ 750 billion in energy purchases by the European Union in the coming years and the purchase of weapons worth “100s of billions of dollars”, is likely to be good news for a number of EU companies, including Airbus, Mercedes-Benz, and Novo Nordisk, if all the details are in line.
The 15 percent base rate will still be considered too high by many parties in Europe, compared to Europe’s early hopes of getting a zero-to-zero rate deal, although better than the 30 percent risked tariff.
This deal reflects important parts of the framework of the deal the US reached with Japan last week. However, like previous deals, this deal still leaves many questions, including tariffs for alcoholic beverages, a topic very sensitive to many parties on both sides of the Atlantic.
Von der Leyen said the tariff also applies to semiconductors and pharmaceuticals, and there will be no tariff from both parties for aircraft and spare parts, certain chemicals, certain generic drugs, semiconductor equipment, some agricultural products, natural resources, and essential raw materials.
On the other hand, President Trump appears to be hinting that pharmaceutical products will not be covered, raising some questions about aspects of the deal. The White House has not issued a fact sheet.
“We will continue to strive to add more products to this list,” said von der Leyen, adding alcoholic beverages were still in the discussion stage.
The deal will be sold as a win for Trump, who is seeking to reorganize the global economy and reduce the decades-old US trade deficit, and has reached a similar framework agreement with Britain, Japan, Indonesia, and Vietnam, although his government has not yet reached the target of “90 deals in 90 days.”
It is known that President Trump has previously periodically criticized the European Union, saying the European Union was “formed to outwit the United States” in terms of trade.
On July 12, President Trump threatened to impose a 30 percent tariff on imports from the European Union from August 1, after weeks of negotiations with major US trading partners failed to reach a comprehensive trade deal.
The European Union itself has prepared a return rate of 93 billion euros of US goods if there is no deal, and President Trump meets the threat of a 30 percent tariff.
Several member states have also urged the bloc to use its strongest trading weapons, anti-forced instruments, to target US services if there is no agreement.
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