EU-US deal: damage limitation in the short term but no long-term strategy

After months of tariff threats and mounting tensions, the European Union and the United States reached a trade deal on Sunday, imposing a 15% tariff on most European goods entering the US market. While this is lower than the 30% tariff previously threatened by Trump, it remains significantly higher than the zero-for-zero tariff initially proposed by the EU and the pre-existing tariff rates that exports were subject to.

The deal reflects the political and economic pressure placed on Europe to accept terms that compromise its own interests. It cannot be seen as a balanced agreement, but rather damage limitation in the face of economic bullying. In exchange for avoiding harsher tariffs, the EU has committed to purchasing $750 billion worth of fossil energy imports and investing a further $600 billion in the American economy. Von der Leyen also confirmed that the EU would seek to buy $250 billion of US energy products annually for the next three years.

The 15% tariff level now agreed is only 5% below the 20% ‘offered’ during Trump’s ‘Liberation Day’ announcement. Moreover, it is 5% higher than the rate the UK agreed to in a separate deal in May.

Core industries such as automotive, pharmaceuticals and semiconductor manufacturing will face the full 15% tariff. Meanwhile, EU steel and aluminium exports will continue to face 50% tariffs. Conversely, the EU and the US have agreed to eliminate tariffs entirely on aircraft, critical raw materials and selected goods, including certain chemicals, generics and agricultural products. The full scope of product coverage remains unclear.

Although this deal avoids a prolonged trade war between Europe and its biggest trading partner, industriAll Europe is clear that it comes at a heavy cost for European industries and workers. Export-oriented sectors across Europe, particularly in Germany, are expected to be worst affected by this deal. For instance, early estimates for Germany suggest that job losses could reach 60,000 in the short term, potentially doubling in the medium term. These forecasts align with findings from the IAB-BIBB-GWS study, which modelled the effects of US tariffs at 25% without countermeasures.

Furthermore, the European Commission has tacitly accepted the legality of unilateral US tariffs, a move that contradicts WTO rules and undermines multilateralism at a time when economic bullying and brinkmanship are increasingly flourishing.

IndustriAll Europe’s General Secretary, Judith Kirton-Darling, stated: “This deal represents a serious blow to European workers and industries. Accepting tariffs imposed unilaterally by the US locks in significant economic damage and threatens tens of thousands of jobs. It also undermines the global trade rules under the WTO that protect fair competition and workers’ rights worldwide.

“Such a far-reaching agreement, affecting the future of our industries, industrial jobs, strategic autonomy, and the Green Deal, was reached behind closed doors with no democratic scrutiny — this is unacceptable,” said Judith Kirton-Darling, General Secretary of industriAll Europe.

One of the few positive aspects of the deal is that it temporarily contains the policy uncertainty that has paralysed investments across Europe. That uncertainty has been one of the biggest invisible costs of this tariff standoff. However, the stability offered by the deal is fragile.

This agreement goes far beyond trade policy. It exposes Europe’s dependencies in critical areas such as energy, security and technology. The narrative of ‘damage control’ hides the fact that this is not a calculated compromise, but rather a deal with long-term costs for European industry.

“Europe cannot afford to be a witness to these coercive tactics. We need a clear political response that defends our industries and our workers against unfair practices. At the same time, this agreement underscores the urgent need for Europe to invest decisively in its own industrial and technological sovereignty — from energy and critical raw materials to digital infrastructure and defence capabilities”, concluded Judith Kirton-Darling.