US-EU trade Deal

Aaditya Deore

Introduction- On 27th July 2025 US (president Donald Trump) and EU (European Union President Ursula von der Leyen) negotiated on trade agreement to stabilize bilateral trade and to avert a trade war.

Provisions of Trade deal –

  1. 15% of tariff on major EU import by US.
  2. 0% tariff on aircraft equipments, semi-conductor equipments, generic medicines.
  3. 50% tariff on steel and aluminum.
  4. EU will purchase $750 billion (64 lakh crore) US energy within three years.
  5. EU will invest $600 billion (52 lakh crore) in US industries in addition to $100 billion already invested.
  6. EU will buy US military equipment in its major defence budget.

Benefits of trade deal-

  1. Aversion of trade war between world’s two largest economies.
  2. Market stability, elimination of uncertainty.
  3. Reduction of tariff on strategic goods like aircraft, semi-conductor, generic medicine etc.
  4. Trade Deficit of US will reduce through investment of EU.
  5. Energy deficiency of EU will be reduced by purchasing of US energy.

Challenges of trade deal-

  1. Cost of European products will increase in US market.
  2. Still trade deficit of US will remain high.
  3. Many European Union members have future concerns which may harm unity of European Union.
  4. Steel and Aluminum industries do not get any benefit.
  5. Even 15% tariff on important sectors like cloths, leather etc. will cause higher prices for US consumer and low profits for EU businesses.

Conclusion- This long-waited trade deal has given a predictability in global market. Although its inclination toward US and compromises by EU cannot be denied but then also it has given market stability and eliminated many concerns so for today’s perspective this deal has vital significance.

References-

  1. https://www.whitehouse.gov/fact-sheets/2025/07/fact-sheet-the-united-states-and-european-union-reach-massive-trade-deal/
  2. https://www.thehindu.com/news/international/us-eu-trade-deal-wards-off-further-escalation-but-will-raise-costs-for-companies-consumers/article69863161.ece
  3. https://www.theguardian.com/us-news/2025/jul/28/eu-us-trade-deal-tariffs-european-union-five-key-takeaways
  4. https://www.bbc.com/news/articles/cx2xylk3d07o

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