Background
On July 27, 2025, President Donald Trump and the President of the European Commission Ursula von der Leyen announced a deal had been made between the two trading partners. By coming to an agreement, the EU has, for now, avoided increased U.S. tariffs that took effect the first week of August.
In the days following the announcement, the respective parties released details of the agreement. Forvis Mazars US reported the details in our alert “The United States and European Union Trade Deal.” While the two sides seemed to agree in principle on the terms of the agreement, the details they each provided were sometimes varied. Subsequently, the EU postponed reciprocal tariffs on U.S. imports. However, the EU has stressed that the tariffs can be put in place at any time should the deal collapse.
On August 21, 2025, the U.S. and EU issued a joint statement, agreeing upon a framework for a trade agreement and adding clarity to what the parties have agreed to. The European Commission also released a questions and answers webpage providing additional details.
The joint statement provides 19 key terms of the framework agreement as a “first step in a process that can be further expanded over time to cover additional areas and continue to improve market access and increase their trade and investment relationship.”
Tariffs
By coming to an agreement, the EU dodged higher reciprocal tariffs that came into effect for dozens of other countries on August 7, 2025. Tariff provisions represent the bulk of the framework agreement1 and include the following:
- EU will eliminate tariffs on U.S. industrial good.
- EU will provide preferential market access to U.S. seafood and agricultural goods including tree nuts, dairy products, fresh and processed fruits and vegetables, processed foods, planting seeds, soybean oil, and pork and bison meat.
- U.S. will impose tariffs at the higher of either the U.S. Most Favored Nation (MFN) rate or 15% on EU goods.
- As of September 1, 2025, the U.S. will only apply the MFN tariff rate to unavailable natural resources (including cork), aircraft and parts, generic pharmaceuticals and their ingredients and chemical precursors. Ongoing, other sectors and products will also be considered for inclusion.
- U.S. tariff rate will not exceed 15% for EU pharmaceuticals, semiconductors, and lumber.
- After the EU formally introduces legislation to enact the tariff reductions previously mentioned, then the U.S. will reduce tariffs on EU automobiles and parts to not exceed 15%.
- For steel, aluminum, and their derivative products, the parties will consider overcapacity protections for their respective domestic markets and ensure secure supply chains by establishing tariff-rate quotas.
- Rules of origin2 will be negotiated to ensure the benefits of the agreement primarily stay with the parties.
EU Purchases & Investments
As countries have made agreements with the U.S. to avoid higher tariffs, a common element has been economic investments into the U.S. As examples, Japan agreed to a $550 billion investment in the U.S., while South Korea agreed to $100 billion. This agreement with the EU continues this trend with the following:
- EU will purchase $750 billion of U.S. liquified natural gas, oil, and nuclear energy products through 2028.
- EU will purchase $40 billion of U.S. AI chips.3
- European companies will invest $600 billion in strategic U.S. sectors through 2028.
- EU will purchase U.S. military and defense equipment.
Addressing Trade Barriers & Restrictions
The framework agreement specifies other barriers, rules, and restrictions that have created inefficiencies in transatlantic trade. The parties seek to reduce or eliminate such impediments including:
- For automobiles, the parties intend to accept and mutually recognize each other’s standards.
- Enhance opportunities for technical cooperation on standards development in key sectors and facilitate conformity assessments on additional industrial sectors.
- Resolve longstanding concerns and barriers affecting trade in food and agricultural products, including requirements for sanitary certificates for pork and dairy products.
- EU to address concerns to avoid undue impact on U.S. producers and exporters regarding the EU Deforestation Regulation and recognize that U.S. domestic production poses negligible risk to global deforestation.
- There is a joint commitment to provide additional flexibilities regarding the implementation of CBAM4 for all companies (especially small and medium-sized enterprises) in the form of an increase of the de minimis exception, and other additional flexibilities. EU has not committed to preferential treatments for U.S. companies or changes to CBAM.
- EU to ensure that the Corporate Sustainability Due Diligence Directive (CSDDD)5 and the Corporate Sustainability Reporting Directive (CSRD)6 do not unduly impede trade.
- EU reaffirms that U.S. conformity assessment bodies can be designated as “notified bodies” to fulfill essential requirements including cybersecurity.7 The parties will also negotiate an agreement on cybersecurity.
- U.S. and EU will address unjustified digital trade barriers by a commitment from the EU to not impose network usage fees, the U.S. and EU will not levy customs duties on electronic transmissions and will support the multilateral moratorium on such duties at the World Trade Organization.
Working Together
The framework details how the U.S. and EU members will cooperate on a global scale as it relates to each other and other countries. The following provisions apply:
- U.S. and EU members will cooperate and take action related to export restrictions on critical minerals and other similar resources by other countries.
- U.S. and EU commit to discuss high standards related to intellectual property rights protection and enforcement.
- The parties commit to ensure protection of internationally recognized labor rights and the elimination of forced labor in supply chains.
- EU will consult with the U.S. and U.S. traders on digitalization of trade procedures and implementation of legislation currently proposed on EU Customs Reform.8
- The trading partners agree to address non-market policies of third parties, cooperate on inbound and outbound investment reviews and export controls, and duty evasion to strengthen economic security and supply chain resilience. This will be done by addressing non-market practices, unfair competition, and lack of reciprocity in public procurement with respect to other countries.
How Forvis Mazars Can Help
For continued coverage of the global tariff situation and related trade deals, visit our tariff resource webpage and subscribe to our weekly publication “From the Hill.” We can assist you with questions related to global trade and inform you about the effects of the trade deal between the U.S. and EU.
- 1Notably absent from the agreement is that it does not address digital service taxes. President Trump had indicated he may impose additional tariffs on countries who levy these taxes (“Trump Threatens Tariffs on Countries with Digital Taxes,” thehill.com, August 26, 2025).
- 2Rules to attribute the origin of a product for the implementation of trade agreement measures such as tariffs and tariff-quotas.
- 3The EU must implement security requirements in line with those of the U.S. to avoid technology leaks before the exports will begin.
- 4CBAM levies carbon emitted during the production of goods imported into the EU.
- 5CSDDD requires companies to identify and address adverse human rights and environmental impacts of their actions.
- 6CSRD requires companies to disclose information on risks and opportunities arising from social and environmental issues, and the impact of their activities on people and the environment.
- 7In accordance with the Sectoral Annex for Telecommunications Equipment to the Agreement on Mutual Recognition Between the European Community and the United States (1998) and the Radio Equipment Directive 2014/53/EU.
- 8For more information on EU Customs Reform see taxation-customs.ec.europa.eu