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US-EU trade deal is a ‘dark day’ for Europe, says French PM US-EU trade deal is a ‘dark day’ for Europe, says French PM
(about 2 hours later)
Trump tariff of 15% means European exporters will face more than triple the average 4.8% levy now in forceTrump tariff of 15% means European exporters will face more than triple the average 4.8% levy now in force
Trump and von der Leyen announce US-EU trade dealTrump and von der Leyen announce US-EU trade deal
Five key takeaways from the trade dealFive key takeaways from the trade deal
Business live – latest updatesBusiness live – latest updates
The US-EU trade deal, clinched in a ballroom at Donald Trump’s golf resort in Scotland on Sunday, has been criticised by France’s prime minister and business leaders across Germany. The French prime minister, François Bayrou, said the EU has capitulated to Donald Trump’s threats of ever-increasing tariffs, as he labelled the framework deal struck in Scotland on Sunday as a “dark day” for the EU.
The deal, which will impose 15% tariffs on almost all European exports to the US including cars, ends the threat of a punitive 30% import duties being imposed on Trump’s 1 August deadline for a deal, but it is a world apart from the zero-zero import and export tariff the EU offered initially. “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,” Bayrou wrote on X on Monday.
It also means European exporters to the US will face more then triple the average 4.8% tariff now in force, with negotiations to continue on steel, which is still facing a 50% tariff, aviation, and a question mark over future barriers to pharmaceutical exports.
France’s prime minister, François Bayrou, said Europe had submitted to the US, on a “dark day” for the union. “It is a dark day when an alliance of free peoples, gathered to affirm their values and defend their interests, resolves to submission,” Bayrou posted on X.
Accord Van der Leyen-Trump : c'est un jour sombre que celui où une alliance de peuples libres, rassemblés pour affirmer leurs valeurs et défendre leurs intérêts, se résout à la soumission.Accord Van der Leyen-Trump : c'est un jour sombre que celui où une alliance de peuples libres, rassemblés pour affirmer leurs valeurs et défendre leurs intérêts, se résout à la soumission.
The German chancellor, Friedrich Merz, rapidly hailed the deal, saying it avoided “needless escalation in transatlantic trade relations” and averted a potentially damaging trade war. The German chancellor, Friedrich Merz, and the Italian prime minister, Giorgia Meloni, welcomed the deal, which European trade commissioner Maroš Šefčovič described on a Monday as a “breakthrough” in the face of an potential ruinous trade war between the world’s two biggest economies.
German exporters were less enthusiastic. The powerful BDI federation of industrial groups said the accord would have “considerable negative repercussions”, while the country’s VCI chemical trade association said the accord left rates “too high”. The deal, which will impose 15% tariffs on almost all European exports to the US including cars, around triple the 4.8% tariff now in force, but avoiding the threat of a punitive 30% import duties being imposed on Trump’s 1 August deadline for a deal.
It is also clear that the US tariff of 15% on automotive products will place a burden on German automotive companies in the midst of their transformation, hitting sales and profits. The high-level French criticism, and Emmanuel Macron’s silence since the deal was signed between Trump and the European Commission president, Ursula von der Leyen, shows potential divisions as Brussels seeks to get approval for the deal from member states.
The president of the car industry federation VDA, Hildegard Müller, said it was “fundamentally positive” that a framework deal was agreed but warned of huge costs to come. Merz hailed the deal, which was clinched in a ballroom at Trump’s golf resort in Scotland, saying it avoided “needless escalation in transatlantic trade relations” and averted a potentially damaging trade war.
European stock markets hit a four-month high at the start of trading on Monday, amid relief that a deal had been reached. Germany’s Dax jumped by 0.86%, and France’s Cac 40 index rose by 1.1%. Meloni welcomed the deal, saying it had avoided “potentially devastating” consequences.
Ireland, one of the EU’s top exporters to the US, said on Sunday it welcomed the deal for bringing “a measure of much-needed certainty”, but that it “regrets” the baseline tariff, in a statement by its deputy prime minister, Simon Harris. Speaking at a summit in Ethiopia, she said a “trade escalation between Europe and the US would have had unpredictable and potentially devastating consequences”, while adding that Rome would have to “study the details” of the deal.
France’s minister for Europe, Benjamin Haddad, said on Monday that the agreement would provide “temporary stability … but it is unbalanced”. European stock markets hit a four-month high at the start of trading on Monday, amid relief that a deal had been reached. Germany’s Dax jumped by 0.86%, and France’s Cac 40 index rose by 1.1%, lifting the pan-European Stoxx 600 index to its highest level since late March.
But France, considered the co-pilot of the EU project along with Germany, made its disapproval clear.
“This state of affairs is not satisfactory and cannot be sustained,” the French European affairs minister, Benjamin Haddad, said on X, urging the EU to activate its “anti-coercion instrument”, which would allow for non-tariff retaliation.
The French trade minister, Laurent Saint-Martin, criticised the EU’s handling of the negotiations, saying the bloc should not have refrained from hitting back in what he described as a power struggle initiated by Trump.
“Donald Trump only understands force,” he told France Inter radio. “It would have been better to respond by showing our capacity to retaliate earlier. And the deal could have probably looked different,” he added.
Fresh details have emerged of the deal, with senior officials saying the 15% tariff on EU exports will apply to 70% of goods sold to the US.
Zero rates will apply to EU exports in important sectors including aircraft parts, some chemicals, semiconductor equipment and some agricultural products such as cork used in wine bottles and flooring.
The EU pharmaceutical sector will not face tariffs of more than 15% under the deal it struck with Trump, officials have said.
Senior EU officials revealed that pharma exports from the EU will remain duty free until such time as Trump completes his section 232 national security investigation into pharmaceuticals.
Even if he does decide to impose tariffs on pharmaceuticals in the future, EU officials extracted a commitment from Trump that they will be set at a top level of 15% when it comes to EU products.
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He started his negotiations on Sunday by demanding the EU pay 30% tariffs on exports to the EU, followed by 21% and finally settled on 15% in talks that were described as “very intense”, it has emerged.
More details of the deal emerged on Monday but tariffs on important sectors such as steel and wine and spirits will now go into detailed negotiation.
Tariffs on steel will remain at the 50% until a new deal, centred on quotas, is agreed, officials have said.
“The US are very much in need of our high speciality steel,” said Šefčovic on Monday.
Wines and spirits are still on the negotiating table and EU officials expect the list of products that will get a zero rate in the US will be extended in the coming weeks.
Technically the European Commission has the mandate to press ahead with the deal, but it has sought consensus backing from member states throughout the past four months and this is not expected to change.
It expects a “relatively light” joint statement to emerge before, or on Friday, followed by executive orders issued by Trump.
This will give legal status to the 15% tariff rates immediately in the US but the EU suite of tariff changes will not come until legal instruments have been signed, which may take longer than a week.
The German bank Berenberg said the deal brought to an end the “crippling uncertainty” but said it was a victory for Trump.The German bank Berenberg said the deal brought to an end the “crippling uncertainty” but said it was a victory for Trump.
“It is great to have a deal. In two major respects, however, the outcome remains much worse than the situation before Trump started his new round of trade wars early this year,” said Holger Schmieding, Berenberg’s chief economist.“It is great to have a deal. In two major respects, however, the outcome remains much worse than the situation before Trump started his new round of trade wars early this year,” said Holger Schmieding, Berenberg’s chief economist.
“The extra US tariffs will hurt both the US and the EU. For Europe, the damage is mostly frontloaded,” Schmieding said in a note to clients on Monday morning.“The extra US tariffs will hurt both the US and the EU. For Europe, the damage is mostly frontloaded,” Schmieding said in a note to clients on Monday morning.
“The deal is asymmetric. The US gets away with a substantial increase in its tariffs on imports from the EU and has secured further EU concessions to boot. In his apparent zero-sum mentality, Trump can claim that as a ‘win’ for him,” Schmieding added.“The deal is asymmetric. The US gets away with a substantial increase in its tariffs on imports from the EU and has secured further EU concessions to boot. In his apparent zero-sum mentality, Trump can claim that as a ‘win’ for him,” Schmieding added.
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The Italian bank UniCredit also said Trump had got the better out of the EU. “Is this a good deal for the EU? Probably not. The outcome is heavily asymmetrical, and it leaves US tariffs on imported EU goods at much higher levels than EU tariffs on imports from the US,” UniCredit said in a note to clients.The Italian bank UniCredit also said Trump had got the better out of the EU. “Is this a good deal for the EU? Probably not. The outcome is heavily asymmetrical, and it leaves US tariffs on imported EU goods at much higher levels than EU tariffs on imports from the US,” UniCredit said in a note to clients.
“Fifteen per cent is not to be underestimated, but it is the best we could get,” the European Commision president, Ursula von der Leyen, acknowledged.
Initially the EU had tried to hardball the US by threatening but pausing €21bn (£18bn) worth of retaliatory measures in April, and adding another list of €73bn-worth of US imports that would be taxed earlier this month.
But it pivoted to a quick UK-style deal after the Nato summit in June, swapping a comprehensive trade deal for security and defence promises from Trump.
By contrast, China, which threatened the US with a cascade of punitive tariffs, is still negotiating with Trump, who over the weekend froze technology transfer restrictions to create space for a deal with Beijing.
Berenberg said the deal would affect the German economy, but the decline in growth would be offset by the Bundestag’s recent growth stimulus package, it added.
The EU had pushed for a compromise on steel that could allow a certain quota into the US before tariffs would apply. Trump appeared to rule that out, saying steel was “staying the way it is”, but von der Leyen insisted later that “tariffs will be cut and a quota system will be put in place” for steel.
He also ruled out a carve-out for pharmaceuticals but later von der Leyen said the 15% tariff would apply to EU medicine exports and that any other tariffs were up to the US president.
The EU is now subject to a 25% levy on cars, 50% on steel and aluminium, and an across-the-board tariff of 10%, which Washington had threatened to increase to 30% in a no-deal scenario.
The bloc had been pushing hard for tariff carve-outs for critical industries from aircraft to spirits, and its car industry, crucial for France and Germany, is already reeling from the levies imposed so far.