The landmark trade deal reached between the United States and the European Union shows the power President Donald Trump wielded to exact major concessions from trading partners that would have been shocking just months ago.
As part of the deal reached in Scotland between President Donald Trump and European Commission President Ursula von der Leyen, Europe agreed to accept 15% import tariffs on most goods, with exceptions. While much higher than pre-Trump, that number is down from the 30% level being menaced by the U.S. But accepting such a deal signals a shift in what many thought Europe might have received at the outset of talks.
“It’s kind of a testimony to the normalization of protection,” said Bill Reinsch, an expert in trade policy with the Center for Strategic and International Studies who served for 15 years as president of the National Foreign Trade Council. “Because if in March, if anybody in the EU had said we’re going to accept a 15% tariff, you know, they would have been thrown out of the room.”
“And here it is now, sort of this is what we’re going to do — it’s kind of an extraordinary evolution,” Reinsch told the Washington Examiner.
The deal struck by Trump flies in the face of decades of trade policy pursued by both parties in Washington. Over the years, presidents have sought to reach agreements with trade partners to lower trade barriers on both sides by offering the inducement of easing tariffs and restrictions imposed by the U.S. Economists generally argue that tariffs only hurt consumers, because the higher costs will be passed along to them.
Trump, in contrast, views imposing higher tariffs on other countries while gaining greater access to their markets as a victory, and appears to have achieved that outcome in the talks with the EU. Trump has argued that imposing tariffs on trading partners will help rebalance the U.S. trade deficit.
One senior White House official told the Washington Examiner the deal is a “huge win” and that the administration is “naturally euphoric.”
“Six months ago, if you just told the average person, ‘Hey the EU is going to make these sort of commitments that they just made in this deal,’ we would have been called kind of crazy,” the official said. “So, yeah, I think this is a very big deal.”
Another White House official called the deal “the big one” and emphasized that talks are ongoing with several countries, including some other “large fish.”
“President Trump finally got the European Union to open their markets to American-made products, and secured the largest trade deal and investments from the EU in history,” White House press secretary Karoline Leavitt told the Washington Examiner. “President Trump appreciates President Von Der Leyen’s efforts to reach this deal, and fully trusts and expects the EU will live up to their bold, new commitments.”
As part of the deal, the U.S. agreed to lower its auto tariffs to 15% from 25%. While that is a better deal for automakers than before, the 15% still represents a high barrier. More importantly for the U.S., the EU agreed to eliminate tariffs on cars imported from the U.S.
In addition to accepting the 15% tariffs on most goods, Europe also agreed to invest hundreds of billions of dollars in the U.S., and to buy $750 billion in U.S. energy products. Trump called it “the biggest deal ever made.”
The agreement has also been poorly received by some political figures in Europe. For instance, French Prime Minister Francois Bayrou panned the deal as an act of submission from Europe to the U.S.
“It is a dark day when an alliance of free peoples, brought together to affirm their common values and to defend their common interests, resigns itself to submission,” Bayrou said over the weekend on X.
Still, other European officials appear to have accepted the plan and have noted that, absent such a deal, things might have been much worse.
“This agreement has succeeded in averting a trade conflict that would have hit the export-oriented German economy hard,” German Chancellor Friedrich Merz said, according to Reuters.
EU Trade Commissioner Maros Sefcovic has also argued that this is “clearly the best deal we could get under very difficult circumstances.”
The stock market’s reaction to the development was somewhat mixed, but it was much less dramatic than when the Trump administration first announced the sweeping trade policy changes as part of its “Liberation Day” push. Then, the markets tanked, and investors raised fears about a recession.
The Stoxx Europe 600 Index rose slightly on Monday’s announcement but later pared back those gains and ended slightly in the red. Major U.S. stock indices also were largely flat as the information was digested. Notably, many details of the deal reached between Trump and von der Leyen are still unclear.
“I think that swapping uncertainty with some higher degree of certainty is a kind of positive,” Mark Hamrick, senior economic analyst at Bankrate, told the Washington Examiner.
But Hamrick pointed out that many questions remain. He pointed out that the 15% rate is still far higher than before the Trump administration came into office, and there are open questions related to inflation and economic growth. Before Trump came into office, the average tariff on U.S. imports from the EU was 1.2%.
Also, Trump is pushing to get more U.S. vehicles into a European market long dominated by non-American vehicles. But that, too, comes with questions, Hamrick said.
“There aren’t too many people in Europe that are looking to drive an Escalade down a narrow Roman street,” he said.
Jon Toomey is the President of the Coalition for a Prosperous America, one of the leading groups advocating economic protectionism and the strategic use of tariffs. Toomey said that he thinks the U.S. is undergoing a readjustment in its approach about tariffs and trade policy.
“I think you’re finally starting to see that a lot of these economists were in the groupthink dogma, and that they’ve been wrong for many decades, except for the team of economists at CPA,” Toomey told the Washington Examiner.
Overall, how the trade deal will affect each side remains to be seen. Reinsch, with CSIS, said that it is in the best interest of both sides to put a good face on the deal. He also noted that the EU might have gotten other benefits as part of the agreement that weren’t initially announced.
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Reinsch also said it was probably wise for von der Leyen to have worked on it directly with Trump.
“So I think it was a smart move on von der Leyen’s part to seek a direct meeting, because I think she figured out that if you want to close, that’s really the only way to do it,” Reinsch said.