The United States and the European Union (EU) announced a joint statement documenting the trade agreement on the 21st (local time), 25 days after the agreement was reached between the leaders on the 27th of last month.
The joint statement released in the afternoon stated, "The United States plans to swiftly ensure that the combined (final) tariff rate, including the most-favored-nation (MFN) tariffs on EU pharmaceuticals, semiconductors, and wood, does not exceed 15%."
This means that even if the item tariffs under the trade expansion law Section 232 that the United States warned about for pharmaceuticals and semiconductors are determined, EU products will not exceed 15%. In a situation where all trading partners of the United States are expected to be subject to item tariffs, the EU effectively became the first to receive a promise on the tariff cap.
The joint statement also specified that if both sides officially prepare legislation to implement the agreement, which includes eliminating all tariffs on U.S. industrial products, a tariff of 15% will also apply to European automobiles and auto parts. Currently, a total of 27.5% is imposed, including 2.5% under MFN plus a 25% item tariff.
Both sides also noted that regarding the steel and aluminum, and their derivatives, on which the United States has imposed a 50% tariff, they plan to consider opportunities for cooperation to protect each domestic market from oversupply, stating that this includes ensuring mutual supply chain security and involves a tariff-rate quota (TRQ) solution.
The introduction of a steel TRQ was announced by the EU after last month's agreement was reached, but this is the first time the United States has formalized it. From Europe's perspective, they can expect a partial tariff reduction effect up to the TRQ quantity. However, the specific TRQ application quantity will need to be discussed later.
Earlier, the United States and the EU agreed to reduce the reciprocal tariff rate on EU products from the initially announced 30% to 15%, effective from the 7th of this month. However, delays in announcing the joint statement documenting the agreement at that time and the slow implementation of the agreement by the U.S. side led to unresolved complaints and uncertainties from the European export industry.