U.S. Reaches Trade Truce With EU, May Extend China Tariff Pause

Protracted negotiations with the European Commission have come to an end, with Washington reaching a trade truce with the European Union on Sunday. The 27-member trade bloc will face 15 percent tariffs across a wide range of products and consumer goods, narrowly avoiding the 30 percent duty rate initially threatened by President Donald Trump before Friday’s tariff deadline.

The president, alongside European Commission President Ursula von der Leyen, revealed the framework of the deal from his Turnberry, Scotland, golf course on Sunday, calling it “the biggest deal ever made” before walking back his comments slightly. The distinction actually belongs to Japan, which struck an agreement with the U.S. last week, he said.

“We are agreeing that the tariff straight across for automobiles and everything else will be a straight-across tariff of 15 percent,” Trump added. The EU also agreed to purchase $750 billion in energy from American sources, and plans to invest $600 billion into the U.S. economy, though details on that element of the agreement were not elucidated.

The EU, by contrast, will completely lower its trade barriers. “All of the countries will be opened up to trade with the United States at zero tariffs, and they’re agreeing to purchase a vast amount of military equipment,” Trump said.

Von der Leyen said the dealmaking process was “indeed very tough.” The trade bloc had been angling in recent weeks for a lower duty rate of 10 percent.

“But we came to a good conclusion for both sides,” she added, noting that finding consensus with the U.S. will bring stability and predictability to the trade relationship, which has been marked by volatility in recent months. “That’s very important for our businesses on both sides of the Atlantic.”

“We’ve had a very good relationship over the years, but it’s been a very one-sided transaction, very unfair to the United States, and I think both sides want to see fairness. But it’s been a very, very one-sided deal that it shouldn’t be,” Trump said, reiterating his stance that the trade imbalance between Europe and the U.S. must be rectified.

The president noted that tariff letters to other nations that haven’t yet struck deals with the U.S. are on the way, to be received by trade partners before Aug. 1. Last week, Trump hinted that Canada might be among them, saying trade officials “haven’t really had a lot of luck” negotiating. Earlier this month, Trump threatened the country with 35 percent tariffs in a letter to Prime Minister Mark Carney.

Meanwhile, an exclusive report from the South China Morning Post on Sunday revealed that a short-term resolution for U.S.-China trade may be brokered shortly, with an Aug. 12 deadline looming. The Hong Kong-based news outlet wrote that the 90-day bilateral tariff pause, negotiated by Washington and Beijing trade officials in Geneva in May, is expected to be extended by another three months. Trade talks between the two nations will take place in Stockholm on Monday, sources close to the matter said.