Trump’s threat set the EU in motion – Now an agreement was born

The European Commission, the Parliament and the Council of the Member States agreed on the legal text to finalize the trade agreement with the United States on the night before Wednesday.

With the agreement, the EU will remove all tariffs on US industrial products and non-sensitive agricultural products. The United States, on the other hand, sets a 15 percent tariff ceiling on EU exports.

In the negotiations, it was agreed that the contract will be valid until the end of 2029.

The EU justifies the agreement as bringing stability, predictability and protection to trade relations that have been overshadowed by repeated US tariff threats. The EU’s goal is also to have further discussions with the US to lower tariffs.

EU trade commissioner Maros Sefcovic says the agreement will increase transatlantic stability and cooperation.

The EU and the United States have the world’s largest bilateral trade and investment relationship and the longest integrated economic relationship, covering almost 30 percent of the world’s trade in goods and services and 43 percent of the world’s gross domestic product.

EU-US trade has doubled over the last decade and was around 1.7 trillion euros in 2024. In 2023, EU and US companies owned more than 4.7 trillion euros worth of investments in each other’s markets.

Minister of Trade of the EU Presidency Cyprus Michael Damianos emphasized that a predictable partnership is in the interest of both parties.

“The EU and the US share the largest and most integrated economic relationship in the world. Maintaining a stable, predictable and balanced transatlantic partnership is in the interests of both.”

Strong defense mechanisms

Cyprus Trade Minister Damianos also emphasized the “strong safeguards” included in the agreement, which are meant to protect Europe’s interests.

The agreement contains a special protection mechanism that gives the EU the means to intervene in situations where imports from the United States increase significantly and cause or threaten to cause serious harm to domestic producers. If there is sufficient evidence, the Commission can decide to suspend the application of the regulation in whole or in part.

The agreement also establishes the conditions on the basis of which the Commission can suspend the application of the regulation in whole or in part by means of an implementing act. This can be done if the United States does not comply with the commitments of the joint statement, weakens its goals, or disrupts trade and investment relations with the EU, for example by discriminating against EU economic operators.

The suspension mechanism can also be triggered when there are sufficient indications that such actions may occur in the future.

In addition, the Commission has the authority to suspend tariff concessions for steel and aluminum products to the United States if the country continues to apply a tariff of more than 15 percent to derivatives of these products imported from the EU by December 31, 2026.

Lawmakers also agreed on a sunset clause that says the regulation will expire at the end of 2029 unless further action is taken.

The agreement also includes regular monitoring of the economic effects of trade liberalization measures on the EU economy.

Next steps

Next, the agreement must be approved by the European Parliament and the Council of the member states, which are expected to approve it, although not all political groups and member states unreservedly support the agreement, which has been criticized as disproportionate.

The European Parliament is due to ratify the agreement on June 16, and member states are expected to approve it next week.

President of the United States Donald Trump has threatened to raise tariffs on European cars from the current 15 percent to 25 percent if the deal is not in place by July 4.

It is also still open whether the Trump administration will accept the changes and security clauses made by the EU, as representatives of the US administration have previously warned the EU not to change the trade agreement framework concluded last July.