U.S. and EU Finalize 15% Tariff Deal Before Trump Deadline Boosts European Markets Defers U.S.-China Tariffs

The U.S. and the European Union finalized a trade agreement on July 27, 2025, averting a potential transatlantic trade war just days before President Donald Trump’s deadline to impose higher tariffs. The deal, announced by Trump and EU Commission President Ursula von der Leyen, sets U.S. import tariffs on most EU goods at 15%, a reduction from the initially proposed 25% but higher than the 10% baseline rate in place since the spring. Strategic products such as aircraft, certain chemicals, and agricultural materials are exempt, while luxury goods remain taxable [1][7].

The agreement includes a reciprocal EU commitment to purchase $750 billion in U.S. energy and invest $600 billion in American projects by 2028. However, the feasibility of these pledges has been met with skepticism. Trump described the deal as a “colossal” win for the U.S., while von der Leyen noted the 15% rate aligns with Japan’s tariffs as a fair benchmark [3][8]. The pact also defers escalations in U.S.-China tariffs, which remain under negotiation for a mid-August deadline.

Markets responded cautiously but positively. European equities opened higher on July 28, with the S&P 500 and Nasdaq Composite briefly trading in positive territory. Gold prices fell to a three-week low as risk appetite shifted toward equities, while Brent crude surged 2% to a 10-day high, driven by reduced geopolitical uncertainties and the EU’s energy purchase commitment [2][5]. Analysts emphasized the deal’s role in stabilizing short-term markets but highlighted unresolved tensions, such as aircraft subsidies and agricultural tariffs, which remain under negotiation [7].

The timing of the agreement was critical. Trump’s initial August 1 deadline was extended through late July, with final terms negotiated over the weekend. The deal also ties into broader geopolitical strategies, including a shorter deadline for Russia to end its invasion of Ukraine. While economists broadly support the agreement as preferable to a trade war, they caution that long-term risks persist, particularly the EU’s capacity to meet energy procurement targets and the unresolved nature of U.S.-China trade discussions [9].

Sources:

[1] [title: US-Europe trade deal: Trump, Von der Leyen ink deal moments before tariff deadline - what we know so far] [url: https://timesofindia.indiatimes.com/business/international-business/us-europe-trade-deal-trump-von-der-leyen-ink-deal-moments-before-tariff-deadline-what-we-know-so-far/articleshow/122945151.cms]

[2] [title: Gold falls to near 3-week low as US-EU deal boosts risk appetite] [url: https://www.reuters.com/world/china/gold-falls-near-3-week-low-us-eu-deal-boosts-risk-appetite-ahead-fed-meeting-2025-07-28/]

[3] [title: EU and US announce trade deal: What you need to know] [url: https://energy-analytics-institute.org/2025/07/28/eu-and-us-announce-trade-deal-what-you-need-to-know/]

[5] [title: European markets rally as Trump and EU ink trade deal] [url: https://uk.finance.yahoo.com/news/european-markets-rally-trump-eu-080114038.html]

[7] [title: US inks trade deal with EU days before deadline] [url: https://blockworks.co/news/us-eu-trade-deal-tariffs]

[8] [title: US President Donald Trump announces 15% tariffs on EU] [url: https://timesofindia.indiatimes.com/business/international-business/us-eu-trade-deal-donald-trump-announces-good-deal-for-everybody-after-talks-with-eu-chief-ursula-von-der-leyen-reciprical-tariff-rate/articleshow/122937866.cms]

[9] [title: US-EU trade talks: Will Ursula von der Leyen clinch a deal with Trump?] [url: https://www.aljazeera.com/news/2025/7/27/us-eu-trade-talks-will-ursula-von-der-leyen-clinch-a-deal-with-trump]