EU-US Trade Deal: What's Been Agreed and What's Still Unclear
The European Union and the United States have reached a preliminary trade agreement, but many details still need to be worked out. While the deal avoids a full-blown trade war, it introduces new tariffs and obligations with significant implications—especially for Ireland.
Key Elements of the Deal
- Tariffs Introduced: A 15% import tariff will apply to most EU goods exported to the US. This is half the 30% tariff previously threatened by former President Donald Trump.
- Industries Affected: The tariff applies broadly, including key EU sectors such as automotive, pharmaceuticals, and semiconductors.
- Exemptions: Aircraft and components, some chemicals, generic medicines, selected agricultural products, and critical raw materials will be tariff-free.
Major EU Commitments
- US Energy Purchases: The EU has agreed to buy around €640 billion worth of US energy products—mainly LNG, oil, and nuclear fuel—over the next three years.
- Military Spending: Brussels has also committed to spend at least €515 billion on American military equipment.
What’s Still Unclear?
- Spirits and Dairy: Crucial sectors for Ireland—especially whiskey and dairy—remain in limbo. It’s unknown whether products like Irish whiskey will face the 15% tariff, which could seriously impact exports worth nearly €2 billion annually.
- Northern Ireland vs Republic of Ireland: It's also unclear whether exports from Northern Ireland will be treated differently than those from the Republic. A recent UK-US deal includes a 10% tariff on many NI goods, but no similar terms have been confirmed for the Republic. The dairy industry warns that tariff divergence could disrupt the island’s integrated supply chain.
Who Pays the Tariff?
The 15% tariff will be paid by US-based companies buying EU goods. They can either:
- Absorb the cost,
- Negotiate lower prices with EU suppliers, or
- Pass the cost on to American consumers.
This could lead to reduced demand for EU goods in the US, potentially forcing Irish and EU exporters to lower their prices or lose market share.
EU consumers, however, won’t face price increases unless the EU imposes reciprocal tariffs—something now unlikely given the deal.
Is This a Good Deal?
Pros:
- Avoids a Trade War: The agreement removes the immediate threat of 30% tariffs and brings stability to the €1.6 trillion annual EU-US trade relationship.
- Lower Car Tariffs: EU carmakers benefit from a reduction in the existing 27.5% US tariff, which will drop by 12.5%.
Cons:
- Concessions by the EU: Critics argue the EU has accepted one-sided terms. While EU exports face a 15% tariff, US goods entering the EU won’t be similarly taxed.
- Political Backlash: Hungarian Prime Minister Viktor Orbán mocked the deal, while French Europe Minister Benjamin Haddad called it "unbalanced."
What’s Next?
Further details—especially regarding the spirits sector and NI/ROI trade—will be negotiated in the coming weeks. After that, the deal must be approved by EU member states. If all goes smoothly, it could take effect before the end of the summer.