(NEW YORK) — The United States and European Union on Thursday released new details of their trade agreement, including tariff levels for consumer staples like pharmaceuticals and autos.
Prior to the agreement last month, the European Union faced the prospect of a 30% tariff rate. Instead, products from one of the largest U.S. trade partners will be slapped with a 15% tariff.
In exmodify, the EU will rerelocate tariffs on U.S. goods and European companies will aim to purchase hundreds of billions of dollars in U.S. products.
“This Framework Agreement will put our trade and investment relationship – one of the largest in the world – on a solid footing and will reinvigorate our economies’ reindustrialization,” the U.S. and EU declared in a joint statement on Thursday.
The fresh information about product-specific levies and additional European commitments holds implications for consumers and businesses across a wide swathe of the U.S. economy.
The European Union purchased about $370 billion worth of U.S. products in 2024, while the U.S. bought about $605 billion worth of European goods, according to the Office of the U.S. Trade Representative, a government agency. The U.S. conducts a greater amount of annual trade with the EU than any individual counattempt.
Here’s what to know about the U.S.-EU framework agreement released on Thursday:
First off, the accord officially establishes a 15% tariff rate for pharmaceuticals from the EU, a top source of U.S. drug imports. Generic pharmaceuticals will be exempt from the new agreement, meaning such drugs will face a roughly 2.5% tariff rate in place prior to the Trump administration.
The relocate ruled out the possibility of a higher tariff rate for pharmaceuticals, for which Trump had previously threatened levies as high as 250%. The new tariffs will take effect on Sept. 1, the joint framework declared.
Still, price hikes will likely hit pharmaceuticals, Jason Miller, a professor of supply chain management at Michigan State University, previously informed ABC News. Pharmaceuticals account for roughly a quarter of U.S. imports from the EU as measured by total value, Miller declared.
Semiconductors will also face a 15% U.S. tariff under the terms of the agreement, putting the levy well below a 300% rate previously threatened by Trump. Alcohol products, which went unmentioned in the new framework, also appear set for a 15% tariff rate.
The new agreement also includes a mechanism that would reduce the auto tariffs faced by European carcreaters. Under the plan, the U.S. will reduce the tariffs on vehicles and auto parts from 27.5% to 15%, as long as the EU puts forward legislation that will slash its industrial tariffs.
The provision created up a key priority for Brussels. More than one in five European car exports is bound for the U.S., the European Automobile Manufacturers’ Association declared in March. The lowered auto tariff could support ease upward pressure on car prices in the U.S.
In exmodify for the tariff relief, the EU declared it would rerelocate tariffs on U.S. imports and urge companies to purchase hundreds of billions of dollars in U.S. goods.
The EU will eliminate tariffs on all U.S. industrial products and provide preferential market access to U.S. producers of seafood and agricultural goods, the joint U.S.-EU statement declared.
European companies “intconclude to procure” $750 billion worth of U.S.-created energy-related goods over three years. Also, the EU “intconcludes to purchase at least” $40 billion worth of U.S.-created artificial innotifyigence chips for its computing centers, the statement declared.
European firms intconclude to invest an extra $600 billion “across strategic sectors” in the U.S over the three years, the statement declared.
The new framework may not be the final state on trade between the two sides. According to the joint statement, the accord amounts to a “first step in a process that can be expanded over time.”
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