BRUSSELS (AP) — American and European Union officials released a bare-bones account Thursday of their trade deal that imposes a 15% import tax on 70% of European goods exported to the United States, but they left blank key areas such as wine and spirits as well as steel and indicated that talks would continue on those and a slew of other important sectors.
The two sides said the document was only “a first step in a process that can be further expanded to cover additional areas.” They are dealing with
the vast range of goods traded between the two economies in what is the largest bilateral trading relationship in the world, involving $2 trillion in annual trans-Atlantic business.
The 3 1/2-page text represents a political commitment and is not legally binding. It contrasts with the typical format for trade agreements, which can be hundreds of pages long and carry legal force.
The key provisions are the 15% tariff on most EU goods, a zero rate on U.S. cars and other industrial goods exported to the 27-member EU, and a range of exceptions to the 15% rate for aircraft and aircraft parts, generic pharmaceuticals and pharmaceutical ingredients, with other sectors to be added for goods crucial to each other’s economies. Those goods would face lower tariffs from before President Donald Trump’s tariff onslaught.
“The EU has agreed to open its $20 Trillion market,” Trump's commerce secretary, Howard Lutnick, said on X. “The second largest in the world behind the great USA.”
He said the deal was “a major win for American workers, US industries, and our national security. Tariffs should be one of America's favorite words.”
European officials have had to defend the deal against dismay from businesses and member governments at the higher tariffs and criticism that the EU gave away too much. European Commission President Ursula von der Leyen sold the deal as granting quick relief from the even higher U.S. tariff on EU cars of 27.5% and as opening the way for further negotiations that could exclude more goods from the 15% tariffs. The deal provides that the lower tariff on cars would apply retroactively from Aug. 1 if the EU can introduce legislation to implement its part of the deal by then, which EU officials say they will do.
“Faced with a challenging situation, we have delivered for our member states and industry and restored clarity and coherence to transatlantic trade,” von der Leyen said. “This is not the end of the process.”
The chief EU trade negotiator, Maros Sefcovic, echoed those sentiments. "The alternative was a trade war with sky high tariffs ... it builds confidence. It brings stability,” he said.
Economists say higher tariffs slow economic growth and will be reflected in higher consumer prices.
One category of goods not excluded from tariffs on EU goods was wine and spirits, which had enjoyed zero tariffs on both ends since a 1997 trade deal. Sefcovic, said EU officials had not won an exemption “yet” but hoped to in future talks and that “doors are not closed forever” on that issue.
That means American distillers face zero tariffs in Europe the short term, but also the possibility of EU retaliation down the line, said Chris Swonger, president and CEO of the Distilled Spirits Council of the United States. “Without a permanent return to zero-for-zero tariffs on spirits, American distillers do not have the certainty to plan for future export and job growth without the fear of retaliatory tariffs returning,” Swonger said in a statement.
The EU has suspended retaliatory tariffs on US goods including wine and spirits until Feb. 5, 2026.
Proposals to exempt a certain amount of EU steel imports, known as a tariff rate quota, have been left unresolved pending more talks.
The 15% tariff is much higher than tariff levels on both sides from before Trump began imposing his tariffs, when they averaged in the low single digits. The tariffs are paid on the U.S. end, either absorbed by American businesses importing the goods, lowering their profits, or passed on to U.S. consumers in the form of higher prices at the cash register.
The deal also includes nonbinding EU commitments to purchase $750 billion in U.S. energy and for EU companies to invest $600 billion in the U.S. In both cases, the money would come from private companies and is based on assessment by the European Commission on what companies were planning to spend.
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McHugh reported from Frankfurt, Germany, and Hussein from Washington.
