The US and the European Union (EU) have agreed on a new trade deal, President Donald Trump announced on Sunday. The agreement was reached after talks with European Commission President Ursula von der Leyen in Scotland. According to the BBC, the agreement will see a 15% tariff on most goods imported from the EU to the US. The EU will also buy $750 billion worth of energy from the US. They have also agreed to invest $600 billion more in the US than they are already investing.
The agreement comes just ahead of the US deadline to impose 30% tariffs on European imports from August 1. Trump had warned of this in a letter to EU officials earlier this month. The trade agreement between the US and the European Union may look like a great achievement on the surface. But for the European Union, it may prove to be a loss-making deal made under the pressure of deadlines.
Trump’s threat to impose 30% tariffs before the August 1 deadline pushed the EU into a situation where it had to settle for even less favourable terms. India needs to be cautious in this changing global trade scenario. This agreement is a loss-making deal for the EU in many ways. Under the agreement, a 15% tariff will be imposed on most goods imported from the EU to the US. This is much higher than the 10% rate previously imposed on British goods.Even if it is less than Trump’s threat of 30%, this is an additional cost for European exporters. This will reduce their competitiveness in the US market.