US and EU reach trade agreement

A trade war between the United States and the European Union appears to have been averted: after weeks of tense negotiations, the two parties have reached a trade agreement. Most goods exported from the EU to the US will be subject to a basic tariff of 15 percent.

The agreement was announced by American President Donald Trump and European Commission President Ursula von der Leyen. It covers important sectors such as cars, medicines and semiconductors. Although the 15% tariff is significantly higher than the tariffs in place before 2017, it is less severe than the 30% tariff previously threatened by the US.

Both parties have agreed to completely exempt certain goods from tariffs, including aircraft, aircraft parts, generic medicines, semiconductor equipment and certain agricultural and chemical products. However, the high tariffs imposed by the US on steel and aluminium – currently 50% – will remain in place.

In addition to the tariff agreements, the EU has pledged to purchase $750 billion worth of US energy over the next three years and to invest an additional $600 billion in US sectors such as the automotive and pharmaceutical industries.

Although this agreement has eased trade tensions between the EU and the US for the time being, not all issues have been resolved. For example, more clarity is needed in the coming days on the tariff that will apply to wine and spirits. Further negotiations will take place in the coming weeks to refine the agreement.

(PP with DC - Source: Reuters, NYT - Picture: © Unsplash)