A few weeks ago, US President Donald Trump sent European Commission President Ursula von der Leyen a letter, and posted on Truth Social on Saturday: “Starting on August 1, 2025, we will charge the European Union a Tariff of only 30 percent on EU products sent into the United States, separate from all Sectoral Tariffs.”
European Commission staff were suddenly told to report for duty for an emergency weekend convention, while national capitals immediately went into crisis mode for assessment and planning.
Von der Leyen responded by pointing out that few economies operate and respect under such fair guidelines as the EU does, pointedly referring to an overstep on behalf of the USA, which seems to flex its muscles in demonstrating that the EU bloc as a whole can be pressured into being an American vassal state (Trump threatened to inflate tariffs if the EU didn’t fold in time).
But European leaders rapidly admitted a trade war wouldn’t make sense right now, and prioritized avoiding escalation.
Trump, who threatened that he was in a bad mood upon arrival, left yesterday’s discussion with Von der Leyen in a buoyant disposition as the deal locked in U.S. tariffs of 15 percent on most imports from the EU.
While a tariff of “only 30 percent” is enormous, 15% sounds sour to many Europeans, who are already facing inflation and, in countries like Romania, austerity measures.
The European economy never fully recovered from the Covid pandemic before it was hit by the implications of Russia’s invasion of Ukraine.
Von der Leyen said the 15 percent tariff rate will be a ceiling, applying to cars and semiconductors (while the German car industry has also managed to get an equal 15% on what it imports to the States). The tariff scenario for alcohol has not yet been discussed.
Essentially, Europe will replace Russian gas with purchases of energy from the U.S. with purchases of $250 billion per year for the rest of Trump’s mandate, she informed.
Meanwhile, Trump maintained that steel and aluminum tariffs will stay 50%.
Trump returned to his vacationing happily, apparently exceeding his own expectations by getting the deal wrapped up before its proposed deadline — in contrast to the freeze of talks between Russia and Ukraine, which has been paralyzed for months and which Trump swore to mediate. Commentators have called it a capitulation to Trump, seeing it as a useless concession in what is the world’s largest transatlantic trade relationship. EU seemed to have gained nothing except bowing its head away from danger, while the US gained billions in investments on behalf of Europe.
The tariff rate applying to imports from the EU would be 15 percent, with the same rate for cars — a key demand of the powerful German car industry. Pharmaceuticals will not be covered by the deal. Trump also said that steel and aluminum would continue to be subject to 50 percent tariffs.
One sensitive industry that will likely come back into discussion is that of pharmaceuticals — possibly Trump’s Achilles’ Heel, as he has mentioned it time and time again. Meanwhile, von der Leyen’s Achilles’ Heel — and probable justification for folding easily — is more obvious: Trump’s threaten to withdraw military support for Ukraine.
America exerting its power has illustrated the EU’s weak points, from its vulnerable economic policies, which would need revamping given a troubled and changeful landscape, and its lack of independent foreign policy.
Trump wants drugs manufactured in the US. Now we’ll wait to see what a separate tariff deal for those will look like.
