US, EU tariff deal capped at 15%

The US and EU struck a trade agreement Thursday to cap tariffs on pharmaceuticals, lumber, and semiconductors at 15%, averting previously threatened steep hikes.

President Donald Trump had earlier warned of tariffs up to 250% on drugs and 100% on chips.

The deal also rolls back tariffs on “unavailable natural resources,” like cork, all aircraft and aircraft parts, generic pharmaceuticals and their ingredients to pre-January levels starting September 1.

Automakers like Volkswagen and Mercedes welcomed the pact. Some EU requests, such as tariff reductions on wine and spirits, were not met.

In exchange, Europe pledged to buy big from America. It intends to purchase up to $750 billion in US energy and $40 billion in AI chips by 2028, while European companies are expected to invest another $600 billion in the country.

Economists warn the fragile deal could unravel quickly, while critics say it deepens Europe’s dependence on the US.