On August 21, the White House and the European Union released a joint statement that sheds some light on aspects of the framework trade deal announced last month. The joint statement confirms the baseline 15% U.S. tariff on goods from the EU and clarifies that European lumber, microchips, and pharmaceuticals will remain subject to that 15% duty even if the U.S. imposes higher duties in those sectors following the conclusion of pending Section 232 investigations.
Lower tariffs on autos—which are currently set at 27.5%—was a major aspect of the framework deal when it was announced in July. Yesterday’s statement clarifies that the EU will maintain the lower 15% rate on autos, but after taking measures to remove tariffs on U.S. industrial goods. The statement also specifies that the EU will take measures to remove tariffs on a range of U.S. seafood and agricultural products, including pork and bison meat, dairy products, soybean oil, and others.
The U.S. also committed to apply the existing Most Favored Nation rate to certain European products, identified as: unavailable natural resources (e.g., cork), aircraft and aircraft parts, generic pharmaceuticals and their ingredients and chemical precursors.
Other aspects of the deal remain unclear. The statement does not specify the rates that European metals will face, nor does it mention wine and sprits. While the statement includes EU pledges to purchase $750 billion of U.S. energy products, an unspecified amount of military equipment, and $40 billion of U.S. A.I. chips, it is not clear how those purchases will be mandated or enforced. And while the statement indicates that European companies will invest $600 billion into the U.S. through 2028 based on “investment intentions expressed by European companies,” hard details remain unclear.
The statement also mentions pledges regarding other trade measures, including streamlining sanitary certification requirements for certain U.S. food products, a pledge by the EU not to adopt or maintain network usage fees, a joint commitment to address “unjustified” digital trade barriers, unspecified measures to ease the impact of EU deforestation and carbon tax laws on U.S. businesses, and a bilateral agreement not to impose customs duties on electronic transmissions.
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