The European Parliament is moving to abolish tariffs on industrial goods, the core of the US-European Union (EU) trade agreement reached with the United States last year. Tariffs on US industrial goods such as machinery and auto parts, as well as on lobster, will be cut to zero. The legislation, which EU member states had postponed twice over the past year, passed due to pressure from US President Donald Trump, who threatened to impose a 25% tariff on European cars, according to analysts.
The European Parliament approved the core of the US-EU trade agreement after one year, the New York Times (NYT) reported Tuesday. The EU parliament passed the agreement that day with 440 votes in favor and 151 against. Once the EU Council, which represents member state governments, approves the trade legislation on the 26th, the agreement will take effect after publication in the official gazette.
The approved content includes not only the abolition of tariffs on US industrial goods but also the elimination of tariffs on lobster and reductions on some US agricultural products. In return, most European products exported to the United States will face tariffs of only up to about 15%. Higher tariffs may apply depending on the item.
Trump and European Commission President Ursula von der Leyen signed the trade agreement in July last year. Under the deal, the United States caps tariffs at 15% on most EU exports, including automobiles, pharmaceuticals and semiconductors, while the EU abolishes tariffs on US products to 0%.
The EU's ratification process was difficult. Voices emerged in the European Parliament demanding additional safeguards, arguing the trade agreement could deal a blow to EU manufacturing and agriculture. Trump's threat to annex Greenland, a Danish autonomous territory, his remarks on a trade embargo against Spain, and the US Supreme Court's ruling that reciprocal tariffs were illegal also delayed the approval.
Trump then pressured the EU, claiming it had not complied with the agreement, threatening on the 1st of last month to raise tariffs on European cars and trucks back to 25%. However, he left room to suspend the tariff hike if the agreement's implementation was completed by July 4. At the same time, Trump issued another warning by imposing a 100% tariff on French wine and champagne in response to France's digital tax.
After follow-up negotiations, the two sides agreed on a final compromise implementation plan on the 20th of last month. The EU secured a "suspension clause" allowing the European Parliament to request that the European Commission halt the agreement's implementation if the United States does not lower steel and aluminum tariffs by year-end. Some other clauses will expire after 2029 if not renewed.
