Agreement on Reciprocal, Fair, and Balanced Trade

Agreement on Reciprocal, Fair, and Balanced Trade
The United States (orange) and the European Union (green)
TypeTrade agreement

The Agreement on Reciprocal, Fair, and Balanced Trade, informally called the EU–US trade agreement, was a proposed trade agreement between the European Union (EU) and the United States. A framework agreement was announced in a joint statement on 21 August 2025.[1][2] The framework agreement provides for 15% tariffs on all European exports and 0% tariffs on certain US exports.[3] It was proposed to replace the previous Transatlantic Trade and Investment Partnership (TTIP) efforts. As a result of the Greenland crisis and Trump's threats of a trade war against several EU and NATO members in retaliation for their participation in the Operation Arctic Endurance NATO exercise in Greenland, EU leaders said the approval of the agreement cannot proceed.[4]

Tariffs

The US is imposing a 15% tariff on almost all EU goods, MFN tariffs for unavailable natural resources, aircraft, and generic pharmaceuticals, capping combined MFN + Section 232 tariffs at 15% for pharmaceuticals, semiconductors, and lumber, while leaving metals at 50% above quotas.[2][5]

Non-tariff barriers

As part of the framework agreement, the EU committed to ensuring that the Corporate Sustainability Due Diligence Directive (CSDDD) and the Corporate Sustainability Reporting Directive (CSRD) did not pose undue restrictions on trade, including reducing administrative burdens and proposing changes for a harmonised civil liability regime for due diligence failures, committed to provide additional flexibilities for US companies in its Carbon Border Adjustment Mechanism (CBAM), and committed to avoid any undue impact of the Regulation on Deforestation-free Products (EUDR).[1][6]

With respect to cars the US and EU intend to accept and provide mutual recognition to each other's standards.[1] They commit to boosting technical cooperation between standards bodies and expand conformity assessment recognition across industrial sectors.[1] They also commit to streamlining sanitary certificate requirements for pork and dairy products.[1]

Investment

European states committed to $750 billion in energy purchases and $600 billion in additional investments in the United States.[7] However, this commitment is non-binding and not part of the formal trade agreement.

History

In August 2020, the EU and US agreed, for the first time in two decades, to reduce certain tariffs (on a most favoured nation basis, meaning the tariffs are dropped for all trading partners).[8][9] But in 2025, US President Trump stated his intention to reduce the US trade deficit and achieve "energy dominance". He linked the two goals in April, calling on the European Union to buy $350 billion in American energy to eliminate its trade surplus with the United States. The EU faced a 20 percent tariff if it fails to reach a deal with Trump.[10]

On 27 July 2025, the United States and the European Union reached a political agreement on a trade agreement, announced by US President Trump and EU Commission President Von der Leyen at Turnberry, Scotland.[3][11] After the agreement, French Prime Minister François Bayrou called it a "submission",[12] while German Chancellor Friedrich Merz said the deal would significantly damage his country's finances.[13] On 28 August the Commission put forward regulations for the Parliament and Council to enact the EU's tariff reductions, a necessary step for the US to retroactively lower its tariffs on EU cars to 15% from 1 August.[14] On 5 September, President Trump signed an executive order amending the reciprocal tariff program and expanding executive agencies' authority to implement the framework agreement and future final trade and security agreements.[15]

As a result of the Greenland crisis and Trump's threats of economic warfare against EU and NATO members in retaliation for their participation in the Operation Arctic Endurance NATO exercise in Greenland, EU leaders said the approval of the agreement cannot proceed.[4]

On 21 January 2026, The European Parliament has suspended the approval of a key US trade deal agreed in July in protest against Donald Trump's demand to take over Greenland. The suspension was announced in Strasbourg, France, on Wednesday, as the US president addressed the World Economic Forum in Davos.[16]

On 19 March 2026, the European Parliament’s trade committee agreed to eliminate most tariffs on industrial and agricultural goods from the US, adopting two legislative proposals by 29 votes in favor, 9 against and 1 abstention, thus bringing the EU-US trade agreement closer to implementation.[17][18]

References

  1. ^ a b c d e "Joint Statement on a United States-European Union framework on an agreement on reciprocal, fair and balanced trade" (Press release). Brussels: Directorate-General for Trade and Economic Security. 21 August 2025. Retrieved 30 August 2025.
  2. ^ a b "EU and US publish Joint Statement on transatlantic trade and investment" (Press release). Brussels: Directorate-General for Communication. 20 August 2025. Retrieved 1 September 2025.
  3. ^ a b "EU and US agree trade deal, with 15% tariffs for European exports to America". BBC News. 27 July 2025. Retrieved 28 July 2025.
  4. ^ a b "European leaders warn of 'downward spiral' after Trump threatens tariffs over Greenland". The Guardian. Retrieved 17 January 2026.
  5. ^ Strupczewski, Jan; Blenkinsop, Philip; Payne, Julia; Abnett, Kate (21 August 2025). "What's in Trump's trade deal with Europe?". Reuters. Retrieved 1 September 2025.
  6. ^ Littenberg, Michael; Rotter, Marc; Elliott, Samantha. "US and EU Agree on Trade Framework Agreement – Implications for ESG/CSR Compliance". Harvard Law School Forum on Corporate Governance. Harvard Law School. Retrieved 7 September 2025.
  7. ^ "Trump and Von der Leyen conclude a customs agreement on EU products". ici.radio-canada.ca (in French). 27 July 2025. Retrieved 27 July 2025.
  8. ^ "Joint Statement of the United States and the European Union on a Tariff Agreement" (PDF). European Commission. 21 August 2020. Archived from the original (PDF) on 25 August 2020. Retrieved 25 August 2020.
  9. ^ Fleming, Sam; Williams, Aime (21 August 2020). "EU agrees to eliminate tariffs on US lobster". Financial Times. Archived from the original on 11 December 2022. Retrieved 25 August 2020. The tariffs will be removed according to "most-favoured nation rules", which means they will be dropped for all of Europe's trading partners
  10. ^ "Trump pushes trade partners to buy more US energy as a way to avoid higher tariffs". CNBC. 11 April 2025.
  11. ^ "Donald Trump agrees trade lead with EU president after round of golf at Turnberry". BBC News. 27 July 2025. Retrieved 28 July 2025.
  12. ^ "How European leaders are reacting to EU-US trade deal".
  13. ^ "France and Germany lead downbeat EU response to US trade deal".
  14. ^ "EU proposes tariff reductions to implement EU-US deal" (Press release). Brussels: Directorate-General for Communication. 27 August 2025. Retrieved 30 August 2025.
  15. ^ "Modifying the Scope of Reciprocal Tariffs and Establishing Procedures for Implementing Trade and Security Agreements". Federal Register. National Archives and Records Administration. 10 September 2025. Retrieved 14 September 2025.
  16. ^ "EU suspends approval of US trade deal". bbc.com. Retrieved 21 January 2026.
  17. ^ "MEPs back the lowering of tariffs on US agricultural and industrial products". www.europarl.europa.eu. 19 March 2026. Retrieved 19 March 2026.
  18. ^ "MEPs clear path for full adoption of EU–US trade deal". www.euronews.com. 19 March 2026. Retrieved 19 March 2026.
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