Who benefits from the EU-US trade deal… who does not

European Commission (EC) President Ursula von der Leyen on Sunday night hailed the US and EU trade agreement and a “huge deal”, and thanked President Donald Trump “personally for his personal commitment and his leadership to achieve this breakthrough.” She seemed pleased with what appeared to be a one-sided deal when explained by Trump as he said, “The EU will have a blanket 15 per cent tariff on all EU goods. And the block will open its markets to US exporters with zero per cent tariffs.”

“While there is a lot of upside for the US in this deal, it is less clear what the EU gains,” the BBC noted.

The following day, on Monday, France denounced the trade agreement as a “submission”, though other EU states expressed their support for a deal they, however, acknowledged as lopsided. They note it averts an economically damaging trade war with Washington.

‘Resigns itself to submission’

“It is a dark day when an alliance of free peoples, brought together to affirm their common values and to defend their common interests, resigns itself to submission,” the French Prime Minister, Francois Bayrou, wrote on X.

German Chancellor Friedrich Merz said the agreement would “substantially damage” his nation’s finances, according to a BBC article.

The trade deal will require the approval of all 27 members of the EU, each of which has differing interests and varying levels of reliance on exporting goods to the US.

Merz warned that the economies of the US and Europe would be negatively impacted, but also said the Brussels negotiating team “couldn’t expect to achieve any more” against a US president determined to rebalance relationships with major trading partners.

Hungarian Prime Minister Viktor Orban was not too upbeat either. Urban, a close ally of Trump, said the US president “ate von der Leyen for breakfast”.

In contrast with their negativity, European stocks opened up on Monday, with the STOXX 600 touching a four-month high and all other major bourses also in the green. Tech and healthcare stocks led the way.

“Those who expect a hurricane are grateful for a storm,” said Wolfgang Große Entrup, head of the German Chemical Industry Association VCI.

Trade deal’s winners and losers

Obviously, Trump is the biggest winner of them all. He heads back home with a deal that will pour tens of billions of dollars into US coffers in import taxes. But it may be too soon to raise the trophy, as his victory may not last as long as he’d like if economic data due later this week show that his radical reshaping of the US economy is backfiring.

Figures on inflation, jobs, growth and consumer confidence will give a clearer picture of whether Trump’s tariffs are delivering pain or gain.

Unfortunately for Trump, the American consumer is a loser because, already dealing with inflation, this deal could add to their economic grief by raising the prices of EU goods.

Put simply, a 15 per cent tariff means that if a US consumer used to pay $100 for an EU item, they will now pay $115.

Stock markets are winners

The agreement is “clearly market-friendly, and should put further upside potential into the euro”, Chris Weston at Pepperstone, an Australian broker, told AFP. He’s not wrong. Stock markets in Asia and Europe rose on Monday following the announcement of the deal framework.

German carmakers, losers

The tariff levied on importers bringing EU cars to the US has been nearly halved, from the rate of 27.5 per cent that Trump imposed in April to a new rate of 15 per cent. Cars are one of the EU’s top exports to the US. As the largest car manufacturer in the EU, Germany will have been watching closely.

German carmaking trade body, the VDA, warned that a 15 per cent tax would “cost the German automotive industry billions annually”.

German pharmaceuticals, also losers

Trump said the deal did not cover pharmaceuticals, under which the rate on a number of products was lowered to 15 per cent. However, von der Leyen stated that they were included, and a White House source confirmed this to the BBC.

Regardless, either outcome will affect European pharma, which initially hoped for a total tariff exemption.

US energy, a winner

Trump said the EU will purchase $750 billion (£558 billion, €638 billion) in US energy, in addition to increasing overall investment in the US by $600 billion. “We will replace Russian gas and oil with significant purchases of US LNG [liquified natural gas], oil and nuclear fuels,” said Von der Leyen.

US, EU aviation, a winner

Von der Leyen stated that certain “strategic products” will be exempt from tariffs, including aircraft and aircraft parts, specific chemicals, and certain agricultural products, which implies that aeroplane component producers will have friction-free trade between the huge trading blocs.

Wine, spirits and agrifood

Negotiations continue, with talks more advanced on spirits, according to EU officials. This will be welcome news for Irish distilleries and will likely result in additional lobbying from Europe’s leading winemakers in France, Italy, Germany, Spain, and Portugal. 

Agriculture remains protected from US imports that do not comply with EU rules. However, the EU has eliminated tariffs on some agricultural products it cannot source itself, including certain nuts, processed fish, and pet food, the Guardian explained.

Issues in Ireland

The deal creates a division in Ireland, as traders in Northern Ireland can sell into the US at a 10 per cent tax rate, courtesy of the UK deal, while their neighbours in Ireland will be hit with a 15 per cent rate. The disparity will make for difficult diplomatic conversations over guarantees to maintain stability on the entire island, as outlined in the Good Friday Agreement, which has already been affected by the fallout from Brexit.