Transatlantic tariff deal: US tariffs on cars fall to 15 percent

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The USA will limit tariffs on products in strategically important sectors such as cars, semiconductors, pharmaceuticals and timber to 15 percent. Washington and Brussels have agreed this in a joint declaration that is now available in writing for the first time. The text includes the most important points of the deal that US President Donald Trump agreed with the President of the EU Commission, Ursula von der Leyen (CDU), on July 27 at his golf resort Turnberry in Scotland.

No more than 15 percent

The framework agreement now published sets out in detail the new US tariff regime vis-à-vis the EU, with an all-inclusive maximum tariff of 15 percent for the vast majority of EU exports. Sectors already subject to MFN tariffs of 15 percent or more will not be subject to additional tariffs.

The USA has also committed to replacing the current tariffs on cars and car parts totaling 27.5 percent with an upper limit of 15 percent. This is to take place "in parallel with the launch of the procedures for legislative proposals to reduce tariffs on US products by the EU", explains the Commission. The EU has already agreed to reduce its car tariffs from 10 percent to zero. Should the Commission take this step this month, the tariffs for the month of August could be retroactively refunded to each other. EU Trade Commissioner Maroš Šefčovič announced that the EU would fulfill the necessary conditions in a timely manner.

The partners want to mutually recognize existing standards in the automotive sector and jointly develop future standards. This could apply to autonomous driving, for example.

Computer chips are also covered

For pharmaceuticals, semiconductors and sawn timber, the tariff cap for EU exports applies regardless of future tariffs that could result from ongoing US investigations in these areas, the Commission explains. This provides EU exporters with "much-needed certainty". However, the tariffs on chips and medicines will not apply immediately. The 15 percent rate will only take effect "when the USA decides on the introduction of additional tariffs". Until then, the US most-favored nation tariffs will apply.

In the case of steel, aluminum and their derivatives, both sides have agreed to shield their markets from global overcapacity through protective measures and to work together on secure supply chains.

Impact on machinery, wheels and trucks

The Commission uses the example of a machine with a US MFN tariff of 4 percent to illustrate how the agreement works. Before the political deal, the total tariff for this was 14 percent, as it also included the 10 percent universal tariff. In future, the machine will now be subject to a flat-rate duty of 15 percent. The same applies to a bicycle with a US most-favored-nation tariff of 11 percent, whereby the surcharge ultimately added up to 21 percent due to the 10 percent countervailing duty.

On the other hand, a heavy truck for which the USA levies a most-favored-nation duty of 25 percent is subject to a total duty of the same amount without any additional surcharge. According to the Commission, this represents an improvement on the previous situation, as trucks were currently subject to a 35 percent duty.

Billions for US energy and AI chips

The Commission is maintaining further investment commitments. The EU is therefore pursuing the goal of securing its supply of strategic raw materials, including energy and AI chips. The EU intends to purchase AI chips worth 40 billion euros.

In 2024 alone, the EU mainly imported gas and oil worth around 70 billion euros from the USA. To reduce dependence on Russia, EU states want to purchase US liquefied natural gas, oil and nuclear energy products worth an estimated 750 billion US dollars over the next three years.

EU digital rules are not included

The declaration does not contain any commitment to EU digital regulations, the Commission reiterates. It has made it clear to the USA that changes to the Digital Markets Act (DMA) and the Digital Services Act (DSA) in particular are not up for discussion.

Just a few days ago, it was reported that the finalization of the agreement had been delayed due to the dispute over the EU platform rules. The US government sees this as a kind of trade barrier and did not want to take it off the negotiating table for a long time.

The German Association of the Automotive Industry (VDA) welcomes the fact that there is at least a joint document and that it provides for reciprocal tariff reductions. At the same time, the tariffs that will soon apply will be significantly higher than the original 2.5 percent for car exports to the USA. This will put a strain on the German automotive industry.

(mho)