After months of tense negotiations, the United States (US) and the European Union (EU) have finally reached a landmark trade agreement that has managed to avert a major tariff war between the world's two economic powers.
The agreement was announced by US President Donald Trump and European Commission President Ursula von der Leyen after a one-hour closed-door meeting at Trump's golf course in Scotland on Sunday.
Under the new framework, the US will impose a 15% import tariff on most goods from the EU, only half the original tariff rate of 30% scheduled to begin on August 1.
Trump described the agreement as "the largest ever signed", while revealing that the EU will invest up to $600 billion in the US and significantly increase its purchases of energy and military equipment.
Von der Leyen described the agreement as a major success that can bring stability and predictability, although she admitted that negotiations with Trump were tough and challenging.
However, the 15% tariff is still considered high by some EU member states hoping for a ‘zero-to-zero’ deal. Key sectors such as aircraft, generic drugs, chemicals and certain agriculture are exempted, but 50% tariffs on steel and aluminium remain for now.
The US also retains the power to raise tariffs if the EU fails to meet investment commitments. The EU is expected to lift non-tariff barriers on US automotive and agricultural products in the near future.
The deal is seen as a strategic victory for Trump in his efforts to correct global trade imbalances, including the US deficit with the EU which reached $235 billion last year.
