US-EU Joint Statement on 'Trade Agreement'... Only 25 Days After Leaders' Pact

On the 21st (local time), the United States and the European Union (EU) issued a joint statement that documents the details of their trade agreement. This comes just 25 days after the agreement was reached between their leaders on the 27th of last month.

Through the joint statement, the US stated, "The US plans to swiftly ensure that the final tariff rate, which is the sum of the Most Favored Nation (MFN) tariffs and the tariffs under Section 232 of the Trade Expansion Act applied to EU-made pharmaceuticals, semiconductors, and lumber, does not exceed 15%." Even if the US imposes tariffs on pharmaceuticals and semiconductors under Section 232 investigations as previously announced, the rate for EU goods will not exceed 15%. As all of the US’s trade partners are expected to face item-specific tariffs, the EU is now the first to secure an upper limit on tariffs.

The joint statement also specifies that if the necessary legislation is officially prepared to implement the agreements, including full elimination of tariffs on US industrial products, then a 15% tariff will also be applied to European automobiles and auto parts. Currently, a total of 27.5% tariffs are imposed — 2.5% MFN and 25% item-specific tariffs.

Additionally, with regard to steel, aluminum, and derivatives subject to a 50% tariff from the US, the two sides stated, "We plan to consider the possibility of cooperating to protect our domestic markets from oversupply." They also pledged to "ensure mutual supply chain security, including implementing a tariff-rate quota (TRQ) solution." While the EU announced its steel TRQ plan after the agreement was reached last month, this is the first time the US has officially committed to it.

Thanks to the joint statement, Europe can now expect to see some tariff reductions on TRQ volumes. The specific TRQ volumes to which this will apply will be determined in future discussions.

Previously, the US and EU agreed to lower reciprocal tariffs on EU goods from the originally announced 30% to 15%, effective from the 7th of this month. However, the release of the joint statement documenting this agreement was delayed, as was implementation by the US side at the time.