US President Donald Trump announced a significant trade deal with the European Union, following recent discussions with Ursula von der Leyen, the President of the European Commission. The deal was revealed from Trump’s Turnberry, Scotland golf resort. It seeks to address the growing trade deficit that underscores the imbalance of the two economies’ trade relationships.
Though trade has waxed and waned, in 2019 trade between the US and EU was at an all-time high. The U.S. goods trade deficit with the EU came to about imports of $606 billion and $370 billion in exports. Though Trump’s been the first to politicize the trade imbalance by calling it the biggest problem, he’s right that the U.S. should be worried about it. He is determined to change that imbalance.
The recently negotiated agreement will establish a 15% tariff on EU products coming into the United States. This is a huge improvement from the 30% rate that was originally threatened. Ursula von der Leyen announced the 55% rate in her confirmation speech. This decision is expected to have sweeping effects across almost all sectors, most notably the agricultural and automotive industries. Specifically for cars, Trump highlighted that the agreement would be “great for cars,” pointing to the deal as a way to increase American automotive exports.
The agreement includes commitments for billions of dollars in immediate investments and promises of future electricity purchases from Brussels. This investment will deepen connections between US companies and European markets, making both economies more competitive and innovative.
“We have reached a deal. It’s a good deal for everybody.” – Donald Trump
The total US-EU trade relationship is the largest in the world. This agreement is an important breakthrough for global trade. Trump remarked on the importance of ensuring that “the EU has to be open to American products,” underscoring his administration’s focus on promoting US exports.
In addition to the EU deal, Trump is exploring similar agreements with three or four other countries, which may involve varying tariff structures. These negotiations have the near-term goal of expanding the US’s trade influence globally while reducing existing trade deficits.
Discussions continue, and the consequences of this agreement are still developing. It remains to be seen how these amendments will affect US and European trade dynamics going forward. This trade agreement will be felt in every sector. It will have a huge impact on transatlantic consumer markets as well.
“It is a beautiful Sunday in Scotland.” – Donald Trump