According to Trump administration officials, the European Union agreed to purchase $750 billion worth of American energy over the next three years. Additionally, European investment in the U.S. is set to rise by $600 billion, particularly in sectors like pharmaceuticals, automotive manufacturing, and semiconductors.

The agreement also includes zero-tariff provisions on aircraft, plane parts, generic drugs, and semiconductor equipment. However, steel and aluminum tariffs remain untouched for now, and discussions on exemptions for wine and spirits are ongoing.

U.S. officials confirmed that the 15% tariff rate for EU pharmaceutical and semiconductor exports will apply regardless of similar upcoming global tariff reviews. This partially resolves a key sticking point in the talks, as Europe’s pharmaceutical sector is one of its most valuable U.S.-oriented exports.

Despite the progress, both parties acknowledged that the deal is preliminary. Several industry-specific rates and exemptions still need to be finalized before the August 1 deadline.

Tariff Pressure Forces Breakthrough

The breakthrough came after Trump issued a July 11 letter threatening 30% tariffs if no agreement was reached by August. Faced with the prospect of retaliatory tariffs, the EU finalized a countermeasure package but opted for a negotiated settlement instead.

Germany, with its massive auto export sector, was among the most affected. Chancellor Friedrich Merz praised the agreement, saying it “successfully averted a trade conflict that would have hit the export-oriented German economy hard.”

While the deal gives Europe a better rate than Southeast Asian nations (which face up to 20%), it’s still higher than the 10% applied to British goods, raising concerns about long-term competitiveness.

U.S. auto industry figures have already expressed concern that the tariff disparity may impose thousands of dollars in penalties on domestically assembled cars using non-European parts.

Still, both sides emphasized the importance of cooperation. Von der Leyen noted, “We should not forget where we came from,” referencing earlier threats of severe escalation. Trump, for his part, declared: “We made it.”