A “Framework” Agreement with Global Implications

President Trump hailed the outcome as “a good deal for everybody,” calling it “the largest trade deal in history.” Von der Leyen described the agreement as a “huge deal” and the result of “tough negotiations.” Both leaders framed the deal as a step toward deeper economic cooperation between two of the world’s largest trading powers.

“This agreement brings us closer together,” Trump said. Von der Leyen echoed that sentiment, adding that the EU’s massive energy investment would help reduce Europe’s dependence on Russian fuel sources.

The European Commission has characterised the deal as a “framework agreement”, with technical and legal details to be finalised in the coming weeks. It must also be approved by all 27 EU member states.

Key Terms of the Agreement

• US Tariffs: A 15% blanket tariff on EU goods entering the US, down from a proposed 30%.

• EU Tariff Concessions: Zero tariffs on certain US goods, including aircraft parts, specific chemicals, and some agricultural exports.

• EU Investment Commitments:

  • $600 billion toward purchasing US military equipment

  • $750 billion in US energy, including liquefied natural gas, oil, and nuclear fuels

• Tariffs Remaining: A 50% US global tariff on steel and aluminum remains in effect.

Mixed Reactions Across Europe

Reaction across Europe was cautious. French European Affairs Minister Benjamin Haddad acknowledged the deal’s temporary benefits such as tariff exemptions for French spirits—but criticized it as “unbalanced.”

Ireland, one of the EU’s most US-dependent economies, warned that the new tariffs still made transatlantic trade “more expensive and more challenging.” German Chancellor Friedrich Merz praised the stability the deal would bring, noting that avoiding a full-blown trade conflict was essential for both economies. Italian Prime Minister Giorgia Meloni welcomed the agreement but reserved judgment until the final terms are released.

One unresolved issue is alcohol tariffs. France and the Netherlands are still pushing for exemptions on wine and beer, which were left out of the current framework.

A Victory for Trump — but at What Cost?

The agreement allows Trump to claim a major trade victory ahead of the upcoming US election season. According to estimates based on 2024 trade volumes, the 15% tariffs could generate around $90 billion in annual revenue for the US government.

However, questions remain over the deal’s long-term benefits for the EU, especially as its negotiators sought to avoid even steeper tariffs. Von der Leyen emphasised the need to “rebalance” the relationship, likely in an attempt to speak Trump’s language and secure a deal.

Despite the win for the US, the fact that EU leaders settled for higher tariffs than the UK’s 10% rate, secured in a separate agreement, and Japan’s 15% rate indicates that the bloc had limited leverage in negotiations.

Golf Course Diplomacy

The deal was struck in an unusually informal setting: after Trump completed a round of golf at Turnberry with family and guests. The president, currently on a five-day visit to Scotland, is scheduled to meet UK Prime Minister Keir Starmer on Monday. He will then travel to Aberdeen, where he plans to open a new Trump golf course alongside his sons.

Looking Ahead

While both sides are eager to frame the agreement as a win, its implementation and impact will unfold over the coming months. For now, the deal avoids a costly trade escalation and opens a path to deeper cooperation, if both sides can hold to its terms.

Trade between the US and EU totalled nearly $976billion in 2024, making their relationship one of the most economically significant in the world. This deal, while not perfect, may help stabilise that vital connection at a critical time for global trade.