Donald Trump has announced a tariff deal with the EU to end four months of difficult negotiations between Washington and Brussels and averting a damaging transatlantic trade war.
The European Commission chief, Ursula von der Leyen, said “we have a deal” after a 40-minute meeting with Trump at his Turnberry golf resort in Scotland where the US president is on holiday for the weekend.
She described it as “a big deal, a huge deal” that would bring “stability” and “predictability” to both sides.. “The two biggest economies should have a good trade flow,” she said.
“It solves a lot of stuff and was a great decision,” said Trump, describing the agreement, which also involved the EU agreeing to spend tens of billions of dollars more on US energy products, as “a powerful deal” and an “important” partnership.
“This is this is really the biggest trading partnership in the world, so we should give it a shot,” he had said before the private meeting started.
Keeping the EU delegation, who had flown in on Sunday for the meeting, on tenterhooks to the end, the US president had repeated less than an hour earlier that the chances of a deal were only a “50-50”, and that “three or four sticking points” remained.
Von der Leyen said the meeting was “tough” and “very difficult”. Referring to a pre-meeting with Trump in front of the cameras, she later told reporters at Glasgow airport: “You saw the tension at the beginning. So we had to work hard to come to a common position.”
Under the agreement, the US will levy a 15% baseline tariff for most EU exports to the US, limiting a higher border tax charge on EU goods sold to the US market. However, the tax rate is higher than before Trump came to power, and a 50% tariff remains on steel exports; a set back for that industry.
There was initial confusion over pharmaceuticals after Trump said the sector would not be included.
Speaking to reporters at Prestwick airport in Glasgow a short time later, Von der Leyen said they were included but there were no guarantees of later increases in import duties.
“It is agreed that we have 15% for pharmaceuticals. Whatever the decisions later on is of the president of the United States: how to deal with pharmaceuticals in general? Globally, that’s on a different sheet of paper,” she said.
She also revealed zero tariff will apply to a range of other sectors including “all aircraft and component parts, certain chemicals, certain generics, semiconductor equipment, certain agricultural products, natural resources and critical raw materials”.
Under the terms of the deal, Brussels will agree to purchase $750bn worth of energy including liquified gas while at the same time agreeing to invest $600bn in the US, a deal that includes purchases of military equipment.
The deal stabilises the €1.4trn trade between the EU and the US and avoids a 30% tariff rate Trump threatened to impose on 1 August if talks had collapsed.
However, it means the cost of doing business with the US has jumped from the pre-Trump average tariff of 4.8% to 15%.
It also creates a division on the island of Ireland as traders in Northern Ireland can sell into the US on a 10% tariff rate, setting the scene for difficult diplomatic conversations over guarantees to maintain stability on the entire island in the Good Friday agreement.
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Ireland’s deputy prime minister, Simon Harris, said he “regretted” the 15% tariff rate but said “certainty” was important.
“There is still a lot of detail on the agreement which will need to be brought forward including in relation to pharma, aviation and other sectors. Over the coming days, we will be examining what has been agreed and the full implications for Irish business and the economy, including any implications for the All-Island economy,” he said.
There was also confusion over the tariff rate applying to steel. While Trump indicated his punitive 50% rate would continue to apply as part of “a worldwide thing that stays the way it is, von der Leyen told reporters there would be a quota system in place.
The UK steel industry is still faced with 50% tariffs despite Trump’s initial promise they would be brought to zero, with hopes that there could be further concessions when Trump meets Keir Starmer, the British prime minister, in Scotland on Monday.
The agreement struck in Scotland is likely to be greeted with relief by financial markets when they open on Monday, after a turbulent few months with jittery investors spooked by the prospect that Trump’s tariff wars could pummel the world economy.
Trump also signalled progress could be made in trade talks with China, with the US president saying “we’re very close”. Reports by the South China Morning Post on Sunday suggested Washington and Beijing were preparing to announce a 90-day extension to a pause in tariffs to allow for continuing negotiations, before a 12 August deadline.
Markets rallied sharply last week after Trump reached a trade deal with Japan, the world’s fourth-largest economy, amid investor hopes that the measures announced by Washington in the president’s 2 April “liberation day” plan could be avoided.
Facing von der Leyen in the eponymously named DJT ballroom at his Turnberry golf resort, Trump said he was “very honoured” to have done the deal, telling the European Commission president her staff had been “fantastic”.
The two sides shook hands and congratulated each other in front of a bilateral delegation that included the US commerce secretary, Howard Lutnick, and the trade representative, Jamieson Greer.
Looking relieved and flanking von der Leyen were trade commissioner Maroš Šefčovič; Björn Seibert, her head of cabinet; Sabine Weyand, a key player in the Brexit negotiations and now the director general of the EU’s trade commission; and Tomas Baert, a member of von der Leyen’s cabinet who has taken a lead role in talks.