The deal reached between Commission president Ursula von der Leyen and US president Trump in Turnberry, Scotland on 27 July 2025 has been published by the European Commission in a Joint Statement of 21 August 2025. It has been both criticised and lauded. It can be seen either as a betrayal of the EU values of respect for international law and multilateralism enshrined in the Treaty on European Union or as the best deal available, ensuring predictability and stability and providing better terms than secured by others, including the UK. It is also said to be necessary to help ensure some US support for Ukraine. From a US perspective, US Trade Representative Jamieson Greer has announced that it heralds the beginning of a new international order, the "Turnberry System", that will supplant what he considers the "untenable and unsustainable" world order that started with the Bretton Woods agreements after the Second World War.
In this blogpost we briefly describe the content of the unusually named "Framework on an Agreement on Reciprocal, Fair, and Balanced Trade". The word "framework" is intended to reflect the non-legally binding nature of the deal and that further negotiation is intended. We will then discuss how it is being implemented and what may happen next.
The Deal
Perhaps the most important element of the deal is the acknowledgement by the EU of the justification of US demands that trade must be balanced and that the US is justified in reneging on its WTO commitments to bound tariffs and non-discrimination in order to achieve this. Indeed, the EU arguably also accepts the abandonment of the WTO order by providing preferential trading terms to the US and agreeing to collaborate in limiting trade with other countries.
In summary, the specific terms included in the deal are:
- The EU will eliminate tariffs on imports of all US industrial goods and provide preferential access to a wide range of US seafood and agricultural products.
- The US will apply an all-inclusive tariff of 15% to mostimports from the EU except for "unavailable natural resources (including cork), all aircraft and aircraft parts, generic pharmaceuticals and their ingredients and chemical precursors" where only the "MFN rates" (meaning those applicable before 2 April 2025) will apply. The few products subject to an MFN tariff rate higher than 15% in the US, will continue to be subject to that rate so the US will not actually reduce any of pre-April customs duties.
- US automobile tariffs under Section 232 of the US Trade Expansion Act will also be limited to 15%. This "concession" was a major objective of the EU and will apply retroactively to 1 August 2025 provided that the EU introduces legislation to exempt US goods from tariffs by the end of August. The US also promises to limit the tariff that it applies to EU goods in sectors where Section 232 tariffs are pending (pharmaceuticals, semiconductors and lumber) to 15%. For steel and aluminium, the parties are to "cooperate on ring-fencing" their markets and the US should introduce tariff rate quotas for EU products.
- The parties will negotiate rules of origin that ensure that the benefits of the deal accrue predominately to the United States and the European Union. This will be a complex task as discussed in our earlier blogpost.
- The EU also makes a number of purchase and investment promises - to purchase $750 billion of oil, liquified natural gas and nuclear energy products and $40 billion of US AI chips as well as to invest $600 billion in strategic sectors in the US - all by 2028. The EU has stated that these purchasing and investment commitments, are aspirational and based on estimates of largely private sector intentions that it cannot control. However, the US is likely to take non-delivery as a justification for applying increased tariffs.
- There are a series of less precise commitments, including:
- A commitment by the EU to "substantially increase" procurement of US military and defence equipment.
- A commitment by the parties to work to reduce non-tariff barriers with special mention of mutual recognition of automobile standards, sanitary certificates for pork and dairy products.
- A commitment by the EU to address US concerns about the EU Deforestation Regulation, Carbon Border Adjustment Mechanism and Corporate Sustainability Reporting Directive.
- A commitment by the parties to cooperate on export restrictions on critical minerals by third countries, the enforcement of intellectual property rights, the protection of internationally recognised labour rights, addressing unjustified digital trade barriers, strengthening supply chain resilience, addressing non-market policies of third countries and cooperating on inbound and outbound investment reviews and export controls.
The deal does not claim to be a free trade agreement (or even to be an interim agreement necessary for the creation of a free trade area) that would qualify as such under WTO rules. The Joint Statement does however state that it is a "first step" in a process that can be further expanded over time to improve market access and increase the parties trade an investment relationship.
US Implementation of the Deal
The US has already implemented its commitment to an all-inclusive tariff of 15% for most products by Executive Order (14326) of 31 July 2025 modifying the so-called "reciprocal duties" on trading partners. The adjustment of the automobile tariffs is expected soon and should take effect retroactively to 1 August 2025 since the EU has met its commitment to propose the elimination of its tariffs on US industrial goods before 31 August 2025.
Further implementation by the US of the deal would appear to be in the hands of President Trump through the promulgation of executive orders (unless and until the US judicial system manages to restore congressional control over tariff policy and trade negotiations). The same can also be said for the withdrawal of commitments in the deal.
Thus, while the EU considers that it has achieved a ceiling on tariffs, the US will consider that this is conditional on it being satisfied with implementation by the EU. Indeed, while the EU considers that since the deal makes no mention of changes to the Digital Services Act and the Digital Markets Act it need take no action to meet US concerns, President Trump has stated that he will impose new tariffs if these concerns are not met.
An important feature of the deal from a US perspective is that it is to be enforced by the imposition of more tariffs whenever the need appears rather than by the traditional means of formal or informal dispute settlement. Of course, the EU could do the same with its commitments. However, as USTR Jamieson Greer has observed in the op-ed cited above "the privilege of selling into the world's most lucrative consumer market is a mighty carrot. And a tariff is a formidable stick."
EU Implementation of the Deal
The need to ensure that automobile manufacturers benefit from the limitation of US tariffs retroactively to 1 August, has led the European Commission to move with unusual haste to propose legislation to reduce tariffs on imports of US goods.
The Commission proposal of 28 August duly proposes to set the duty to be applied to all US industrial products at zero, opens tariff rate quotas on many agricultural products, and suspends the ad valorem duty on many other agricultural products while maintaining specific and entry price duties.
These changes will only enter into force after the proposal is adopted by the co-legislators – the European Parliament and the Council.
An interesting feature of this proposal is that the liberalisation can be reversed by Commission where the US fails to implement the Joint Statement, undermines its objectives, undermines access of EU operators to the US market, otherwise disrupts trade between the EU and the US or even where there are "sufficient indications" that the US will take any such action. The Commission can also reverse liberalisation for a particular product where a substantial increase in US imports cause or threaten serious injury (safeguard clause) or where there is a change in the "objective circumstances" existing at the time of the Joint Statement.
These wide enforcement and surveillance powers over the deal are in the hands of the Commission subject to there not being a qualified majority of Member States opposing it (a so-called comitology procedure).
Conclusion
The EU-US deal sets the scene for the future development of what the Commission notes in its FAQ on the deal is the most significant bilateral trade and investment relationship in the world. It will be based on different principles than heretofore, and its implementation will require continuing intense negotiations between the parties.
The devil is always in the detail and there are many still to be settled. The wide enforcement powers that both sides have reserved to themselves indicate that the deal rests on precarious foundations and could easily unravel.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
