U.S., EU avert trade war with 15% tariff deal

The United States struck a framework trade agreement with the European Union on Sunday, July 27, 2025, imposing a 15% import tariff on most EU goods and averting a bigger trade war between the two allies that account for almost a third of global trade.

U.S. President Donald Trump and European Commission President Ursula von der Leyen announced the deal at Trump’s luxury golf course in western Scotland after an hour-long meeting that pushed the hard-fought deal over the line, following months of negotiations.

“I think this is the biggest deal ever made,” Trump told reporters, lauding EU plans to invest some $600 billion in the United States and dramatically increase its purchases of U.S. energy and military equipment.

Trump said the deal, which tops a $550 billion deal signed with Japan last week, would expand ties between the trans-Atlantic powers after years of what he called unfair treatment of U.S. exporters.

Von der Leyen, describing Trump as a tough negotiator, said the 15% tariff applied “across the board”, later telling reporters it was “the best we could get.”

“We have a trade deal between the two largest economies in the world, and it’s a big deal. It’s a huge deal. It will bring stability. It will bring predictability,” she said.

The agreement mirrors key parts of the framework accord reached by the U.S. with Japan, but like that deal, it leaves many questions open, including tariff rates on spirits, a highly charged topic for many on both sides of the Atlantic.

Oil prices rise as U.S.-EU deal boosts trade optimism

The deal, which Trump said calls for $750 billion of EU purchases of U.S. energy in coming years and “hundreds of billions of dollars” of arms purchases, likely spells good news for a host of EU companies, including Airbus, Mercedes-Benz, and Novo Nordisk, if all the details hold.

German Chancellor Friedrich Merz welcomed the deal, saying it averted a trade conflict that would have hit Germany’s export-driven economy and its large auto sector hard.

German carmakers, VW, Mercede, and BMW were some of the hardest hit by the 27.5% U.S. tariff on car and parts imports now in place.

The baseline 15% tariff will still be seen by many in Europe as too high, compared with Europe’s initial hopes to secure a zero-for-zero tariff deal.

Trump retains the ability to increase the tariffs in the future if European countries do not live up to their investment commitments, a senior U.S. administration official told Reuters on Sunday evening.

The euro rose around 0.2% against the dollar, sterling, and yen within an hour of the deal’s being announced.

The Star