US and EU Finalize Trade and Investment Agreement

On July 27, 2025, US President Donald J. Trump and European Commission President Ursula von der Leyen announced a trade agreement to strengthen economic ties between the US and the EU. The deal, effective from August 1, 2025, aims to enhance market access, reduce trade barriers, and promote mutual investment.

The agreement sets a 15 per cent US tariff ceiling on most EU goods, replacing higher tariffs, including on cars and car parts (previously up to 25 per cent plus 2.5 per cent MFN). US tariffs on EU aircraft, certain chemicals, generics, and natural resources revert to pre-January levels. Both parties will maintain 50 per cent tariffs on steel, aluminum, and copper via tariff rate quotas to address global overcapacity. The EU will eliminate low-level tariffs on US industrial goods and provide limited market access for US fishery and agricultural products, such as Alaska pollock and soya bean oil, under tariff rate quotas, saving EU importers approximately USD 5 billion annually.

The EU plans to procure USD 750 billion in US energy (liquefied natural gas, oil, nuclear) and USD 40 billion in AI chips by 2028, while EU firms intend to invest USD 600 billion in the US by 2029. Both sides will reduce non-tariff barriers, streamline automotive and sanitary standards, and enhance cooperation on supply chain resilience, investment screening, and export controls.

This non-binding political agreement aims to stabilize transatlantic trade, valued at USD 1.6 trillion in 2024, with further negotiations planned to finalize implementation.

(Sources: The White House, European Commission)