EU-US trade deal

Introduction

On July 28, 2025, the EU and US announced they had reached a trade deal (the Deal). More information on the deal has recently been made public via the issuance of a joint statement on August 21, 2025 (the Statement). Per the Deal, the US will impose a maximum all-inclusive 15% across-the-board tariff on most EU exports and, in turn, the EU will eliminate tariffs on all US industrial goods.

It is noted neither the Deal reached nor the Statement is legally binding because there are still items under negotiation (e.g., additional sectors and products to benefit from a reduced rate) and the Deal needs to go through the applicable EU and US procedures.

This alert provides a summary of the tariff components of the Deal (as currently known), along with our key takeaways.

EU tariffs on US goods

Following the Deal, the EU has also suspended, effective as of August 7, 2025, the EU rebalancing measures on US goods adopted on July 24, 2025. It is currently unclear whether these measures on US goods will be abolished or will remain suspended (for background, some of these measures have been suspended since 2020).

The Statement further indicates that the EU intends to eliminate tariffs on all US industrial goods and to provide preferential market access for a wide range of US seafood and agricultural goods (e.g., dairy products, fruits and vegetables, soybean oil, and pork and bison meat). However, we note that certain agricultural goods, which the EU considers “sensitive agricultural products”, are not covered by the Statement (e.g., beef, poultry and rice).

Unlike the effective date of US tariffs on EU goods, the Statement does not indicate the effective date as of which the tariffs on US goods will be eliminated.

US tariffs on EU goods

The US will in principle apply the higher of either the US Most Favoured Nation (MFN) tariff rate or a rate of 15% on EU goods. An MFN clause requires a country providing a trade concession to one trading partner to extend the same treatment to all. We understand the US MFN clause is described as “permanent normal trade relations” to avoid the implication it confers preferential status.

The EU-US deal is different from the previous US trade deals from this year as the 15% cap is structured on an all inclusive basis (i.e., include any existing MFN tariffs) whereas the other US trade deals appear to have been structured in a way whereby any applicable US MFN tariffs are added on top of the agreed US tariff.

Per the Statement, the US will apply the MFN tariffs (which are effectively zero or close to zero) to the following EU goods:

• unavailable natural resources (including cork);

• all aircraft and aircraft parts;
• generic pharmaceuticals and their ingredients; and
• chemical precursors.

Furthermore, the US will ensure for the aforementioned goods that the total tariff comprised of the MFN tariff and the so-called Section 232 tariffs will not exceed 15%. The Questions and Answers issued by the EU indicated that the 15% tariff ceiling will apply to pharmaceuticals, semiconductors and lumber, irrespective of any future tariffs resulting from the outcome of 232 investigations in these sectors. Furthermore, for pharmaceuticals and semiconductors, the MFN tariffs will apply until the US decides whether to impose additional tariffs.

The Statement indicates that the foregoing will be effective September 1, 2025. The Statement expresses that the US and the EU agree to consider other sectors and products that are important for their economies and value chains for inclusion in the list of products for which only the MFN tariffs would apply. The EU has indicated they consider this a “key deliverable”.

The Statement indicates the EU and US intend to consider “tariff-rate quota solutions” for steel, aluminium and their derivative products. This would allow a certain volume of EU steel and aluminium to enter the US at reduced tariffs, but no timeline or concrete commitments have been set. As such, it is understood that the currently applicable 50% tariff on these goods remains in effect for the time being.

Rules of origin

Another item still under negotiation are the rules of origin, which ensure that the benefits of the trade deal accrue predominantly to the US and the EU (i.e., the benefits under the EU-US trade deal should not apply to non-EU/non-US goods).

Commonly, a good is considered to be an originating good if it meets one of the following requirements, as set out in the applicable Free Trade Agreement (FTA) rules of origin:

•  the good is wholly obtained or produced in the territory of one of the parties to the FTA;
• the good is made up entirely of components and materials that qualify in their own right as goods that originate in the FTA region;
•  the good meets the requirements of a specific rule of origin for that product, as listed in the FTA annex (this requirement is most common as it applies to goods that include any non-originating materials in their production); or
•  the good meets other requirements as specified in the FTA.
  We expect that the rules of origin will be implemented under this Deal very similarly to how they have been in FTAs concluded by the US and/or the EU in the past.

Key takeaways

The Deal is a positive development in the sense that it provides some certainty to EU and US importers. Furthermore, the 15% across-the-board tariff makes it easier for US importers compared to the previously applicable diverging tariffs (e.g., 14.9% on cheese and 27.5% on cars and car parts).

It remains to be seen whether the cost of the 15% US tariff will fall on US purchasers (or, ultimately, US consumers) or whether EU sellers will take some of the costs.
First and foremost, EU companies doing business in the US, and vice versa, should review current and pending contracts—and in particular, import and delivery terms, change of law, force majeure, and other similar provisions—in order to understand if any how this Deal may impact any agreements.
Second, companies should review the country of origin of goods being exported from, and imported into, either the EU or the US in order to confirm whether such goods will be subject to the terms of the Deal.

Finally, the tariffs imposed by the US (and reciprocal measures imposed by other jurisdictions) showcase the importance and benefits of supply chain optimization. Our Cross-Border Trade Law Task Force continues to monitor the ongoing tariff developments and would be available to assist with supply chain optimization, leveraging our multidisciplinary legal and international tax expertise.