How the EU-US Trade Pact Could Reshape Global Industries

The new EU-US trade deal alters global supply chain dynamics, sparking concerns across European industries while securing key wins for US exporters

The trade deal between the United States and the European Union, announced jointly by US President Donald Trump and European Commission President Ursula von der Leyen, introduces new tariffs and binding economic commitments that are already reshaping transatlantic industry.

Revealed following talks at Trump’s golf resort in Scotland, the agreement puts in place a 15% tariff on most European goods entering the US, while compelling the EU to invest heavily in American energy and defence products.

These new conditions affect a wide range of sectors and have stirred a wave of reactions from European businesses and political leaders alike.

The agreement is seen by many as a one-sided settlement, with the US reaping clear economic benefits while the EU absorbs higher costs and complex adjustments to its trade infrastructure.

Tariffs, oil deals and defence spending

At the centre of the agreement is a uniform 15% tariff on goods from the European Union entering the United States. This rate is down from the 30% threatened earlier by the US president, but it still stands well above the pre-2024 levels that governed transatlantic trade.

In return for avoiding even higher rates, Brussels has agreed to commit US$750bn in purchases of US oil, gas, nuclear fuel and semiconductors over three years. On top of that, the EU will channel US$600bn into American industries, a sum that reportedly includes military equipment.

Some observers are openly critical of the imbalance.

Prashant Newnaha, Senior Asia-Pacific Rates Strategist at TD Securities, remarks: “A 15% tariff on European goods, forced purchases of US energy and military equipment and zero tariff retaliation by Europe, that’s not negotiation, that’s art of the deal.”

The consequences are being felt fast. Germany’s manufacturing base, heavily reliant on exports, is particularly exposed.

Wolfgang Niedermark of the German industrial federation BDI warns: “Even a 15% tariff rate will have immense negative effects on export-oriented German industry.”

The sentiment is shared across sectors, with the German chemicals trade group VCI also objecting, stating the tariff levels remain “too high.” Volkswagen has already posted a €1.3bn (US$1.5bn) hit to its first-half profits as a direct result of the deal’s new tariff regime.

The impacts of the agreement vary widely by industry.

According to Ursula von der Leyen, certain products are exempt from tariffs altogether, including aircraft and component parts, selected chemicals, generic pharmaceuticals, semiconductor equipment, agricultural items, natural resources and critical raw materials. However, even these exemptions leave crucial sectors in limbo.

Pharmaceuticals, Europe’s largest export category to the US, are not exempt and will be taxed at 15%, a move that disrupts pricing structures and shipping patterns across Europe’s life sciences sector.

The automotive industry, particularly in Germany, now faces a flat 15% tariff on US-bound exports—lower than the 25% global rate set in April, but still more punishing than previous rates.

Manufacturers must now absorb narrower profit margins and reconfigure their supply chains.

By contrast, American suppliers benefit from a reduction in non-tariff barriers. The EU will now recognise US vehicle standards, easing the process for American carmakers to sell in Europe. The agreement also involves changes to agricultural policy, opening up European markets to more US-grown products.

However, there is little change for sectors such as steel and aluminium. Tariffs on those materials remain at 50% and although quota-based solutions are being discussed, the current arrangement maintains what Brussels describes as “ongoing uncertainty for some industries.”

Wine, spirits and niche goods are also awaiting clarity on their tariff classification, leaving exporters unsure of future costs.

Political disputes and economic reality

The deal’s effects are not limited to economics. Politically, it exposes new divides both within the EU and across its borders. Irish businesses are particularly affected.

Companies in the Republic of Ireland will now face the full 15% US tariff, while their competitors in Northern Ireland, covered by the UK-US agreement, will only be subject to a 10% rate. This has reopened debates around post-Brexit customs, especially in light of the Good Friday Agreement.

Political reactions vary. French Prime Minister Francois Bayrou calls the outcome bleak, stating: “It is a sombre day when an alliance of free peoples, brought together to affirm their common values and defend their interests, gives in to submission.”

Meanwhile, Italy’s Giorgia Meloni takes a cautious line, labelling the new tariff “sustainable,” though she notes she is waiting for “details.”

This agreement represents a clear departure from earlier aims of eliminating tariffs entirely. The United States stands to raise around US$90bn per year through the newly imposed duties. EU leaders, for their part, are presenting the pact as a pragmatic step that avoids a more destructive confrontation.

Yet analysts are warning that while the EU may have avoided a deeper trade war, the cost is steep and ongoing. As the European Central Bank puts it, trade conditions are “exceptionally uncertain,” making long-term planning more difficult.

Whether this “new era of stability” will live up to its billing remains to be seen. For now, the costs are already landing and the balance of benefits is being weighed on both sides of the Atlantic.

Source: Supply Chain Digital