By Richard Sterneberg et al DLA Piper’s Regulatory Team
The European Commission and the United States Administration have announced a new trade agreement introducing revised tariff arrangements between the two blocs. The deal last August, covering the world’s largest trade relationship and affecting US$1.7 trillion in annual trade, represents the first major restructuring of EU-US trade relations in decades. Following some initial differing communications on the deal a Joint Statement was made on 21 August, clarifying some of the aspects that had remained controversial.
President Trump and EU Commissioner Von der Leyen negotiates tariffs
The agreement includes a standardized tariff rate of Most Favored Nation (MFN) or 15 per cent (whichever is higher) on the majority of EU exports to the United States (including pharmaceuticals, automobile and semiconductors), as well as product-specific exemptions and commitments to enhanced cooperation in key sectors including energy, investment, and advanced technologies.
However, irrespective of the outcome of the Joint Statement, important aspects of timing, scope, and enforcement might still be subject to change, as EU negotiators may try to bring further goods under the 15 per cent tariff threshold.
In this alert, DLA Piper’s Regulatory, Trade and Government Affairs team outlines the key provisions of the EU-US trade agreement and provides sector-by-sector analysis of the opportunities and risks it presents for transatlantic businesses. With several legal and technical elements still under negotiation, it is important to continue monitoring implementation timelines and sector-specific developments.
TARIFF STRUCTURE AND MARKET ACCESS
The center piece of the agreement establishes a MFN tariff or a ceiling of 15 per cent tariff rate applicable to approximately 70 per cent of EU exports to the United States, valued at EUR380 billion annually. This rate represents a reduction from the 30 per cent tariff threatened by the Trump Administration, while marking a significant increase from the average 4.8 per cent rate that applied to EU exports to the United States before April 2025.
Key sectors where the 15 per cent rate is implemented will have the biggest impact, including automobiles (reduced from the current 27.5 per cent), pharmaceuticals, semiconductors and lumber. The agreement specifies this as an “all-inclusive” ceiling rate, preventing the accumulation of additional duties. In the opposite direction, United States exports to the EU will experience zero or minimal tariff rates, creating asymmetrical market access conditions.
The parties have also agreed to eliminate tariffs entirely, for the US starting from 1 September, on specific categories, including aircraft and component parts, certain chemicals and generic pharmaceuticals, selected agricultural products, unavailable natural resources, and chemical precursors. Furthermore, the door remains open to expand the sectors covered by the MFN tariff, which remains a key deliverable for the EU.
The increased tariffs on EU exports pose a challenge to the cost competitiveness of European companies in key sectors. Meanwhile, preferential access to EU markets strengthens United States companies’ export potential, particularly in industrial goods and tech equipment – even though regulatory adaptation may still be an obstacle.
STEEL AND ALUMINIUM ARRANGEMENTS
Steel and aluminum exports from the EU remain subject to existing 50 per cent United States tariffs until both parties negotiate a new quota system. In the Joint Statement, the parties only commit to possibility to cooperate on ring-fencing their respective domestic markets to address global overcapacity challenges, particularly from Chinese production, while reducing barriers to bilateral trade through tariff reductions and quota arrangements.
The European steel industry has signaled cautious optimism about potential zero-tariff access for traditional exports, though concerns remain about implementation timelines and quota allocation methodologies.
PHARMACEUTICALS
At the press conferences announcing the agreement, there were contradicting remarks regarding the inclusion of pharmaceuticals in the deal, creating uncertainty within the industry. The Joint Statement has confirmed that the 15 per cent tariff deal includes pharmaceuticals.
A pending point was the potential outcome of the Section 232 investigation on pharmaceuticals initiated on 14 April 2025 and still is ongoing. However, the Commission has clarified that the 15 per cent ceiling quota will apply regardless of the outcome of such investigation.
As pharmaceuticals represent the largest export to the United States by value, tariffs are expected to have a significant impact on the sector, with costs estimated between US$13 billion and US$19 billion. As a result of the tariffs, American consumers will likely face higher prices in the long term – unless pharmaceutical companies take action to mitigate the impact. In light of this, several major pharmaceutical manufacturers have already announced major investments in the United States.
It is also worth mentioning that the EU is currently revising its pharmaceutical legislation. Trilogues are ongoing for the General Pharmaceutical Legislation – aimed at reducing administrative burdens, increasing affordability and availability of drugs, addressing shortages, and strengthening supply chain security. The combination of tariffs and a changing regulatory environment intensifies the need for EU pharmaceutical firms to act strategically – for instance, by streamlining operations, investing in regional production, and boosting global competitiveness.
AVIATION SECTOR ALIGNMENT
Under a “zero-for-zero” tariff arrangement, both the EU and United States will levy zero tariffs on all aircraft and components, marking a significant stabilization step for an industry highly sensitive to cross-border trade barriers. Following the resolution of the long-running Airbus-Boeing dispute in 2021, both sides were eager to avoid renewed escalation. The zero-for-zero arrangement provides certainty for manufacturers and airlines reliant on complex transatlantic supply chains.
ENERGY COOPERATION AND STRATEGIC PURCHASES
The EU has committed to purchasing US$750 billion worth of United States energy products through 2028, averaging US$250 billion annually. Reportedly, this sum is the result of negotiations starting from an initial US$1 trillion proposed by President Donald Trump. These purchases will focus on liquefied natural gas, oil, and nuclear fuels, supporting EU objectives to diversify energy sources away from Russian supplies.
The commitment operates through market mechanisms rather than government procurement, with the EU facilitating demand aggregation and addressing infrastructure bottlenecks. Implementation will depend on private sector purchasing decisions and market conditions, rather than mandatory government purchases.
INVESTMENT COMMITMENTS AND COMMERCIAL AGREEMENTS
Under the agreement, EU companies intend to invest US$600 billion in the United States during the current presidential term. This figure represents an aggregation of private sector investment intentions rather than binding government commitments, similar to recent Japan-US arrangements.
The deal also encompasses cooperation on AI chip purchases and military equipment procurement, though specific volumes and timelines remain under discussion.
DIGITAL TRADE
On digital trade, the EU has committed not to adopt network usage fees, while both parties will maintain a zero-for-zero tariff for chip equipment. This agreement prevents price strikes for semiconductor equipment necessary for technological development. The EU has also committed to purchase EUR40 billion worth of AI chips. However, there was no commitment by the EU to refrain from enforcing its digital regulation, nor from considering digital taxes.
ESG & SUSTAINABILITY
The Joint Statement also contains a number of commitments that the EU undertook in relation to its ESG and sustainability framework in order to avoid “undue impact on US-EU trade”. In particular, the EU committed to work to “address the concerns of US producers and exporters regarding the EU Deforestation Regulation”, which is set to become applicable in December this year, as well as to “provide additional flexibilities in the Carbon Border Adjustment Mechanism (CBAM) implementation”. Additionally, with a view to address US concerns in relation to the impact of sustainability regulations on US companies, which culminated last March with the proposition of a bill requiring US companies to stop complying with any foreign sustainability due diligence regulation, the EU stressed that it would “undertake efforts to ensure that the Corporate Sustainability Due Diligence Directive (CSDDD) and the Corporate Sustainability Reporting Directive (CSRD) do not pose undue restrictions on transatlantic trade”.
While no details have been revealed on the CSRD, for the CSDDD, the EU stated it would reduce administrative burden on businesses and propose changes to the requirement for a harmonized civil liability regime for due diligence failures and to climate-transition-related obligations. Both the CSRD and the CSDDD are currently undergoing a revision under the so-called Omnibus I package that intends to simplify the current framework with a view to reduce reporting burdens and enhance competitiveness.
AGRICULTURAL AND FOOD PRODUCTS
The EU has agreed to provide preferential market access to certain agricultural products including specific nuts, fresh and processed fruits and vegetables, seafood, planting seeds, soybean oil, pork and bison meat. Sensitive items including beef, poultry, sugar, rice, and ethanol excluded from the current agreement.
DEFENSE
Despite EU officials had initially clarified that arms procurement remains outside the Commission’s competence and was not factored into the headline trade figures, the Joint Statement recites that the EU “plans to increase procurement of military and defense equipment from the US”. The wording reflects and is in line with recent commitments taken at NATO, Against this backdrop, American defense firms are well positioned to benefit from market dynamics and streamlined acquisition processes, while European defense companies could face growing pressure in their own markets.
SPIRITS AND WINE SECTOR
Wine and spirits remain subject to ongoing negotiations. No mention to this sector is made in the Statement, despite industry associations were calling for zero-tariff treatment. The disparity in treatment creates particular challenges for the Northern Ireland border, where Northern Ireland exporters face the 10 per cent rate imposed on the United Kingdom by President Trump and Ireland faces the 15 per cent EU rate.
ECONOMIC SECURITY
The parties have agreed to strengthen economic security alignment through enhanced supply chain cooperation and coordinated responses to non-market policies from third countries. This includes collaboration on investment reviews, export controls, and duty evasion prevention.
LEGAL FRAMEWORK, IMPLEMENTATION AND NEXT STEPS
The agreement announced on 27 July 2025 established political commitments that were formalized by the Joint Statement and by President Trump’s Executive Order modifying the reciprocal tariff rates for certain countries.
The Joint Statement represents an important stepping stone for EU-US cooperation, outlining a shared political commitment and setting the base for implementation in the respective legal frameworks. Beyond the initial measures outlined, the EU and the United States will continue negotiations – each in accordance with their respective national procedures – to develop and implement the necessary legal instruments for full execution of the agreement.
While the core framework has been established, numerous details are subject to ongoing and future negotiation. Priority areas include finalizing zero-tariff product lists; developing a steel and aluminum quota system; and addressing sector-specific concerns for wine, spirits, and agricultural products.
The asymmetrical nature of the agreement and its departure from WTO pharmaceutical trading norms have generated criticism from some EU member states, particularly France and Germany. However, the European Commission maintains that the agreement provides superior outcomes compared to an escalating trade war scenario.
HOW WE CAN HELP
The revised agreement introduces a highly asymmetrical tariff landscape. For United States businesses, the deal offers expanded market access across key industries, including energy, digital, agriculture, and high-tech manufacturing. EU companies, meanwhile, face higher export costs and obligations to adapt supply chains and accelerate United States-based investment strategies.
As the legal framework evolves and sector-specific negotiations continue, companies are encouraged to actively assess both risks and opportunities emerging from this shifting transatlantic trade architecture, as well as consider engagement opportunities during the ongoing implementation phase. The extended negotiation period for sector-specific arrangements provides windows for industry input on product classifications and exemption criteria. Furthermore, monitoring potential measures taken by the EU to counterbalance the asymmetry of the deal and support EU competitiveness (eg, procurement models that favor EU-based production) is encouraged.
Our Global Regulatory, Trade and Government Affairs team assists companies in navigating complex international trade environments, combining deep legal experience with policy analysis and stakeholder engagement capabilities.
