A new EU-US trade deal has been met with mixed reactions from EU member states. News Reporter Daire Lydon takes a look at how this deal may question the harmony of the bloc.
When European Commission President Ursula von der Leyen stood side by side with US President Donald Trump in Washington this July, the sense of relief on the part of both sides was palpable. The deal struck by the two leaders introduced a 15% tariff on EU goods entering the US, in return for a pledge from Brussels to channel hundreds of billions in European investment into the US economy.
The agreement was presented to the public as a breakthrough. Trump, ever the enthusiast, declared it as “the biggest deal ever made”, while Von Der Leyen insisted that the deal and the relationship between the parties created unity in a fragile transatlantic relationship.
While the pact narrowly avoided 30% blanket tariffs on European exports it has created division within the European Union and the reality of the relationship is likely to be complicated.
Troubled history
Trade disputes between Brussels and Washington are nothing new. There is a colourful history between the two, with transatlantic commerce often being as fraught as it has been lucrative. Despite this, the EU and the U.S. remain each other’s largest trading partner. It is estimated that over $1 trillion is exchanged annually, but disputes over cars, agriculture, and subsidies have often strained relations.
This latest deal, which was struck under the pressure of Trump’s tariff ultimatum, reflects that history: it is not a step toward freer trade, but a settlement designed to avert an all out economic war.
Within the EU there are winners and losers.
Germany:
The agreement can be described as a reprieve for Germany. Its auto industry, previously faced with a 27.5% tariff on cars and parts back in April, will now be capped at 15%, a painful, but survivable outcome. German Chancellor Friedrich Merz described it as the “least bad” option.
France:
France, by comparison, feels betrayed. Its famed wine and spirits sector has been denied a hoped-for exemption and will face the full 15% tariffs. The Prime Minister François Bayrou condemned the deal as an “act of submission,” warning it was a dark day for all of Europe. Wine exporters expressed their bitter disappointment, predicting “major difficulties” in the U.S. market.
Italy:
Italy, with its prized food and fashion exports, falls somewhere in between. Prime Minister Giorgia Meloni called the deal positive, in that it avoids disaster, but warned that sectors such as pharmaceuticals and agriculture, which Trump had in his sights, remain vulnerable.
Ireland:
Ireland expressed some regret about the deal since pharmaceuticals make up much of its U.S. bound exports as tariffs will raise costs for large pharmaceutical companies operating in Dublin and Cork. Taoiseach Micheál Martin struck a sober tone, highlighting what was at stake: “A trade war would have been ‘ruinous’ to Irish jobs and to the economy,” he warned. He praised the deal however for bringing “peace and predictability” which he said are important for businesses.
In the short term, the deal avoids a damaging tariff war which might have shaken the global economy. On the other hand, it also cements a new normal: the U.S. openly imposing tariffs on Europe, and the EU forced to balance collective interests against the divergent needs of its members.
Whether this creates a fracture in European harmony, or becomes simply another chapter in the long-running necessity for pragmatic compromise within a union of states, will depend on what comes next as Brussels continues to negotiate seeking further exemptions for certain sectors in an attempt to soften the blow.