US inks trade deal with EU days before deadline
White House officials have until Friday to solidify tariff agreements with most countries
US President Donald Trump and President of the European Commission Ursula von der Leyen | The White House/Shealah Craighead/"President Trump at Davos" (
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Friday’s the deadline for most countries to negotiate new trade agreements with the US.
President Trump on Sunday reached a deal with the European Union that would establish a 15% levy on imports to the US. It’s less than the original rate proposed on Liberation Day (20%) and half of what Trump threatened the EU with earlier this month (30%).
The rate is higher than the 10% baseline most imports to the US have had since the spring, when the White House first said it would delay higher rates.
Additionally, the EU will purchase $750 billion in US energy and invest $600 billion in the US by 2028, the White House added in a Monday statement. The feasibility of the investment, however, is being questioned.
Investor reaction to the deal was subdued, but still positive. Futures moved higher on Sunday night, and the S&P 500 and Nasdaq Composite indexes were trading in the green for the first half of Monday’s session. Both had dipped lower by 2 p.m. ET.
Economists largely agree that the deal is a good thing — or, at the very least, it’s better than nothing. An all-out trade war between the US and EU would have been a true worst-case scenario, so the agreement brings a sense of relief to both sides. That said, the details are not exactly being universally celebrated. Plus, the details are still a bit murky.
Some “strategic products” are exempt from the 15% tax (i.e. aircrafts, select chemicals and agricultural products and other raw materials). What’s currently not exempt? Luxury goods. LVMH shares were trading 2% lower at the time of writing.
European Commission President Ursula von der Leyen said Monday that more items could be added to the exemption list should negotiations continue.
The White House called the agreement a “colossal deal” that helps “liberate America from unfair trade practices.” Other countries involved are less enthused. Just ask French Prime Minister François Bayrou.
It’s a busy day for the president, and not just because of tariffs. He’s currently in Scotland meeting with British Prime Minister Keir Starmer.
The two are discussing trade and the humanitarian crisis in Gaza, per the White House. Trump told reporters Monday morning that the US will offer aid to Gaza, saying there is “real starvation” in the region.
And let’s not forget about China. Officials have a little longer to ink a deal, but not much. Higher tariffs on both Chinese and American goods will go into effect on Aug. 12.
Chinese and American officials are meeting in Sweden today to discuss how to proceed. More on that (and future trade developments) later this week.
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