US and EU advance trade pact with auto tariff cuts, new steel discounts

Investing.com -- The United States and European Union have taken significant steps to formalize their trade agreement, outlining plans that could reduce tariffs on European automobiles within weeks while creating opportunities for new discounts on steel and aluminum.

In a joint statement released Thursday, both parties detailed the advancement of their preliminary deal announced a month ago. The statement includes specific benchmarks for the EU to secure promised sectoral tariff discounts on cars, pharmaceuticals, and semiconductors, along with new commitments addressing the bloc’s digital services regulations.

The Framework Agreement on Reciprocal, Fair, and Balanced Trade represents what officials described as a concrete demonstration of commitment to mutually beneficial trade and investment between two of the world’s largest economic partners.

Under the agreement, the EU plans to eliminate tariffs on all U.S. industrial goods and provide preferential market access for various American agricultural products. In return, the U.S. has committed to apply reduced tariffs on certain EU products.

For automobiles specifically, the U.S. will reduce Section 232 tariffs on EU-originating vehicles and parts when the European Union formally introduces its legislative proposal to enact tariff reductions. No Section 232 tariffs will apply to EU automotive goods with an existing tariff of 15% or higher, while goods with lower rates will see a combined rate of 15%.

Regarding steel and aluminum, both parties intend to explore cooperation on protecting their domestic markets from overcapacity while ensuring secure supply chains, potentially through tariff-rate quota solutions.

The agreement also addresses non-tariff barriers, with commitments to accept and provide mutual recognition of automobile standards and enhance technical cooperation between standards development organizations.

Additional provisions cover energy cooperation, with the EU intending to procure $750 billion worth of U.S. liquified natural gas, oil, and nuclear energy products through 2028, along with at least $40 billion in U.S. AI chips for computing centers.

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