Key Takeaways:
- The U.S. and EU are close to finalizing a trade deal, but tariffs aren’t part of it.
- The agreement focuses on non-tariff issues like deforestation and carbon border taxes.
- U.S. tech companies might get exemptions from EU regulations.
- New tariffs on EU goods could still happen if a separate deal isn’t reached by July 17.
Trump’s Trade Deal with EU Moves Forward—But Not Without Hiccups
After months of negotiations, President Donald Trump is almost ready to sign a trade deal with the European Union. But there’s a catch: this deal doesn’t address some of Trump’s biggest priorities, like the tariffs he’s been threatening to impose on European goods.
The deal focuses on non-tariff issues, such as reducing deforestation, managing shipbuilding competition, and creating a new carbon-based border tax. These are important topics, but they don’t solve the tariff disputes that have been a major focus for Trump.
So, what’s next for tariffs? The Wall Street Journal reports that tariffs could be part of a separate deal. If no agreement is reached, Trump has said he’ll impose new tariffs on European goods like cars, steel, and other products starting July 17. These tariffs could be as high as 20% on some items.
What’s in the Deal?
The U.S. and EU have agreed on several policies that matter to American businesses. One big win for U.S. companies is the enforcement of the EU’s Digital Markets Act. This law has been used to target American tech giants like Apple and Meta Platforms. Trump has proposed exempting U.S. businesses from this law, which would greatly reduce its impact.
Another important part of the deal is the creation of a carbon border adjustment mechanism. This is a type of tariff that charges companies based on how much carbon their products produce. Under the agreement, U.S. companies would be exempt from this tariff for one year. Additionally, U.S. energy exports to the EU would also be spared from the carbon tariff.
Why This Deal Matters
This trade deal is a big step forward for U.S.-EU relations, but it leaves some key issues unresolved. American businesses will likely welcome the exemptions from EU regulations and the temporary escape from carbon tariffs. However, the ongoing threat of new tariffs on European goods creates uncertainty for companies on both sides of the Atlantic.
If the U.S. and EU can’t reach a separate deal on tariffs, it could lead to higher prices for consumers and trade wars. This would hurt businesses that rely on importing goods from Europe, like car manufacturers and steel producers.
Meanwhile, the carbon border tariff is a significant step toward addressing climate change. By penalizing goods with high carbon footprints, the EU and U.S. hope to encourage companies to adopt cleaner production methods. The one-year exemption for U.S. companies gives them time to adjust to the new rules.
What’s Next?
The U.S. and EU still have a lot of work to do. While this deal addresses some important issues, the tariffs remain a major sticking point. Trump’s deadline of July 17 is fast approaching, and businesses are bracing for the possibility of new tariffs.
If the two sides can reach a tariff agreement, it would remove a major source of tension and create a more stable trade environment. However, if they can’t, the consequences could be severe. Higher tariffs would mean higher prices for consumers and slower economic growth.
In the meantime, U.S. tech companies are breathing a sigh of relief. Exemptions from the Digital Markets Act would reduce the regulatory burden on companies like Apple and Meta, making it easier for them to operate in Europe.
The carbon border tariff is also a positive step for the environment. By working together, the U.S. and EU can set an example for other countries to follow in the fight