Today, the U.S. and the EU have concluded a framework agreement that covers trade-related areas, as well as broader discussions on regulatory and economic policies.
With regard to tariffs, the EU will eliminate tariffs on all U.S. industrial goods and provide preferential market access for U.S. seafood and agricultural products. Additionally, the EU committed not to apply tariffs on U.S. live, frozen, and processed lobster products.
In its turn, the U.S. will apply either the MFN tariff rate or a 15% tariff on EU goods. As of September 1, the MFN rate will apply to unavailable natural resources (including cork), all aircraft and aircraft parts, generic pharmaceuticals, and their ingredients and chemical precursors. Tariffs on pharmaceuticals, semiconductors, and lumber will not exceed 15%. Furthermore, contingent upon the EU's legislative actions to eliminate tariffs on U.S. products, the U.S. will apply a 15% tariff on EU automobiles and automobile parts. A reduced tariff will not apply to steel, aluminum, and their derivative products, though both parties agreed to secure supply chains by applying tariff-rate quotas. Further discussions on tariffs for other products are planned.
Apart from tariff agreements, the EU committed to purchasing a certain value of U.S. products through 2028, including USD 750 billion worth of U.S. energy products, USD 40 billion worth of U.S. AI chips, and USD 600 billion in investments from European companies into various U.S. industries.
Moreover, the counterparts agreed to work on the elimination of non-tariff barriers. The EU will work towards eliminating non-tariff barriers, including mutual recognition of standards in the automobile sector and streamlining sanitary certificate requirements for pork and dairy products.
The EU should address U.S. concerns with regard to the European regulatory burdens, including the EU Deforestation Regulation, Carbon Border Adjustment Mechanism (CBAM), and the Corporate Sustainability Due Diligence Directive (CSDDD) and the Corporate Sustainability Reporting Directive (CSRD). The EU actions should reduce administrative burden and facilitate trade.
In digital sectors, the U.S. and EU agreed to negotiate a mutual recognition agreement on cybersecurity and address constraints to digital trade. The EU confirmed it will not adopt network usage fees. Both parties will not impose customs duties on electronic transmissions and will support the WTO moratorium on such duties, seeking a permanent multilateral commitment. The EU will hold consultation with the U.S. interested parties on digitalization of trade procedures and the implementation of proposed EU Customs Reform legislation.
Regarding third countries, both agreed to intensify efforts against export restrictions on critical minerals and similar resources. They will address non-market policies of third parties and cooperate on investment reviews, export controls, and duty evasion.
Therefore, the Framework Agreement extends beyond tariffs and lays the foundation for broader economic and trade cooperation between the U.S. and EU. It remains to be seen how the agreement will be implemented, especially in areas lacking firm commitments.
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