USA:  August 21, 2025:  USA and EU Unveil Framework on Trade

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The United States and the European Union jointly announced Thursday, August 21, that they have agreed on a framework for reciprocal, fair, and balanced trade, according to a White House statement.

That statement also noted: “With respect to steel, aluminum, and their derivative products, the European Union and the United States intend to consider the possibility to cooperate on ring-fencing their respective domestic markets from overcapacity, while ensuring secure supply chains between each other, including through tariff-rate quota solutions.”

Overall, the White House said the Framework Agreement “represents a concrete demonstration of our commitment to fair, balanced, and mutually beneficial trade and investment.”

Based on the key terms of the agreement:

The European Union intends to eliminate tariffs on all U.S. industrial goods and to provide preferential market access for a wide range of USA seafood and agricultural goods, including tree nuts, dairy products, fresh and processed fruits and vegetables, processed foods, planting seeds, soybean oil, and pork and bison meat.

The US commits to apply the higher of either the US Most Favored Nation (MFN) tariff rate or a tariff rate of 15%, comprised of the MFN tariff and a reciprocal tariff, on originating goods of the European Union.

Additionally, effective September 1, 2025, the US commits to apply only the MFN tariff to the following products of the European Union: unavailable natural resources (including cork), all aircraft and aircraft parts, generic pharmaceuticals and their ingredients and chemical precursors. The US and the European Union agreed to consider other sectors and products that are important for their economies and value chains for inclusion in the list of products for which only the MFN tariffs would apply.

When the European Union formally introduces the necessary legislative proposal to enact the tariff reductions as per the Framework Agreement, the United States will reduce tariffs on automobiles and automobile parts originating from the European Union subject to Section 232 tariffs. This means no Section 232 automobile or automobile parts tariffs will apply to covered European Union goods with an MFN tariff of 15% or higher; and for covered goods with an MFN rate lower than 15%, a combined rate of 15%, comprised of the MFN tariff and Section 232 automobile tariffs, will be applied. “These tariff reductions are expected to be effective from the first day of the same month in which the European Union’s legislative proposal is introduced,” the White House statement noted.

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