The August 1 deadline looms just around the corner, and countries across the globe are preparing last-minute either to crack a deal with the US ahead of the reciprocal tariff implementation or to combat the ripple effect of the tariff across supply chains. In the meantime, when the world’s two largest economies, the United States and the European Union, managed to avert a full-throated trade tussle, they did so with what protagonists would call a compromise, and critics dub an asymmetric capitulation. In a high-stakes meeting at Trump’s Turnberry golf resort in Scotland, US President Donald Trump and European Commission President Ursula von der Leyen unveiled a framework deal with a 15 per cent US tariff on about 70 per cent of EU exports, including cars, pharmaceuticals, semiconductors, and appliances.
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Image source: https://knowledge.insead.edu/
The EU pledged to zero-rate tariffs on strategic US exports and funnel colossal investment into American markets. As observers in Brussels whisper about a deal tilted heavily in Washington’s favour, the treaty may offer stability, but not equity.
The mechanics of the pact are clear about EU exporters facing a 15 per cent duty into the US — a rise from the 2.5 per cent they were accustomed to under the Biden administration, or even the 27.5 per cent during Trump’s prior presidency when layered steel and aluminium levies were still active. At the same time, EU consumers and industries will enjoy zero-for-zero access to US aircraft parts, semiconductor tools, agricultural goods, and other strategic goods. The EU’s side of the ledger promises USD 600 billion in investments along with USD 750 billion in energy imports (chiefly LNG) by 2028.
At first glance, Europe may cite ‘stability’ as markets cheered, where European equities rose to four-month highs as risk faded. But stability, critics claim, is the reward, not fairness.
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