EU US Near 15% Tariff Deal to Avoid Trade War Retaliatory Measures

The European Union and the United States are nearing a trade agreement that would establish a 15% baseline tariff on most EU exports, marking a significant shift from previous threats of higher duties. This proposed framework, reported by multiple sources, aligns with recent U.S. bilateral deals, such as the U.S.-Japan agreement, which also set a 15% baseline tariff. The EU and U.S. have been negotiating to avoid a potential €93 billion retaliatory tariff plan from the EU, which would target American goods if no deal is finalized by August 1 [2]. The current 27.5% tariff on automotive imports from the EU could be reduced to 15%, though exemptions for sectors like aircraft, spirits, and medical equipment would remain in place to mitigate disruptions [4].

The agreement’s structure incorporates the EU’s most favored nation rate of 4.8%, resulting in an effective increase of approximately 10.2 percentage points [4]. This approach reflects the Trump administration’s strategy of standardizing tariffs with major trade partners while avoiding full-scale escalations. The EU’s willingness to engage in these negotiations appears influenced by Japan’s success in securing a similar tariff rate, which reduced automotive tariffs from 25% to 15% [5]. However, EU diplomats have emphasized the need for reciprocity, seeking guarantees that U.S. imports will not face retaliatory measures. The bloc has prepared a $100 billion counterpackage targeting American goods in case of a breakdown in talks [3].

The proposed framework represents a pivot for the Trump administration following its agreements with Japan and the Philippines, which established 15% and 19% baseline tariffs respectively [7]. These pacts highlight a broader shift in U.S. trade policy toward bilateral negotiations rather than multilateral frameworks. For the EU, the negotiations balance the risks of a full-blown tariff war with the need to protect its export-dependent economy. EU trade representatives have stressed that the 15% rate must be accompanied by commitments to address non-tariff barriers and intellectual property concerns [8].

Analysts suggest the deal’s success hinges on resolving contentious issues such as automotive access to the U.S. market and agricultural subsidies. While the 15% baseline offers a middle ground compared to the 30% threat, it still represents a sharp increase for EU exporters. The EU’s retaliatory threat underscores the high stakes involved, with trade officials warning that delays could trigger immediate action [9]. The Trump administration’s approach has also extended to smaller trade partners, with over 20 countries receiving formal tariff proposals. Treasury Secretary Scott Bessent has indicated further agreements could emerge soon, signaling a prioritization of rapid bilateral pacts [10].

The EU’s preparedness to retaliate reflects its leverage in sectors like automotive and aerospace, where U.S. dependence on European exports remains significant. However, the 15% tariff deal could set precedents for future negotiations and potentially complicate long-term economic integration between the transatlantic partners [12]. For now, the focus remains on finalizing the agreement before the August 1 deadline to avoid a trade war that could destabilize global markets.

Source:

[1] [Reuters](https://www.reuters.com/business/eu-heading-towards-15-tariff-deal-with-us-eu-diplomats-say-2025-07-23/)

[2] [The Guardian](https://www.theguardian.com/business/2025/jul/23/eu-100bn-no-deal-plan-trump-tariffs-threat-us-imports)

[3] [Capital Brief](https://www.capitalbrief.com/briefing/eu-and-us-near-15-tariff-deal-reports-say-but-talks-fluid-2ab54390-0b9b-43a8-b077-acea3bcd546a/)

[4] [TT News](https://www.ttnews.com/articles/eu-progress-trade-deal)

[5] [CNBC](https://www.cnbc.com/2025/07/23/trump-shifts-gears-to-eu-after-striking-japan-deal.html)

[7] [Sky News](https://news.sky.com/story/us-and-japan-agree-trade-deal-to-circumvent-worst-of-tariffs-13400568)

[8] [Bloomberg](https://www.reuters.com/business/autos-transportation/us-eu-trade-talks-boosted-by-trumps-agreement-with-japan-2025-07-23/)

[9] [The Wall Street Journal](https://www.wsj.com/livecoverage/stock-market-today-dow-sp500-nasdaq-07-23-2025/card/eu-seeks-15-baseline-tariffs-in-u-s-trade-deal-n3caicLesAN5w0RfPlGO?gaa_at=eafs&gaa_n=ASWzDAiZp7rwqNtjCpR4DjEhoPZQifX4bKphkp1GHuU3LfgMBubAwnaeoJrr&gaa_sig=cYSWRMMJLKWOClpEnLCqZkyzut2chj7Ak-PydFNhLdJFW-AKtRTCZxMRa504gC_EIJksQuhfmm7ksGbSUqm3ag%3D%3D&gaa_ts=688138d4)

[10] [Yahoo Finance](https://finance.yahoo.com/news/live/trump-tariffs-live-updates-trump-strikes-deal-with-japan-as-eu-us-reportedly-close-in-on-pact-200619932.html)

[12] [Reuters](https://www.reuters.com/business/autos-transportation/us-eu-trade-talks-boosted-by-trumps-agreement-with-japan-2025-07-23/)