EU accepts 15% US tariff ceiling

Before Donald Trump's trade war, European exporters selling into the United States paid import taxes of 2-5%. The Turnberry Agreement, approved by the European Parliament's trade committee on June 2, changes the bargain sharply. Europe removes all tariffs on American industrial goods. In return, Washington caps tariffs on European exports at 15%.

That is the trade-off: the EU gives up its remaining tariff protection to secure a ceiling that is three to six times higher than the old rates. The calculation in Brussels is defensive. Trump had threatened 25% or more, so 15% was treated as the smaller loss. The question is whether Europe has bought stability, or merely paid in advance for a weaker position.

What Europe agreed to

The agreement was negotiated by Commission President Ursula von der Leyen and Trump at his Scottish golf resort in July 2025. It covers most industrial products. American machinery, electronics and chemicals will enter Europe duty-free. European versions of the same goods heading to the US will face a flat 15% tariff.

The EU also committed to buying more American liquefied natural gas, or LNG, and to encouraging European investment in US industry. The scale of those pledges remains disputed.

Steel and aluminium are outside the deal. They remain subject to 50% US national-security tariffs, a legal device that allows the president to sidestep normal trade rules by declaring imports a threat to national defence (Council of the EU, 20 May 2026).

Parliament added conditions. EU tariff cuts will begin only after Washington acts first. If the 50% tariffs on metals are not reduced by the end of 2026, the Commission can suspend the whole arrangement. The deal expires at the end of 2029 in any case.

Trade committee chair Bernd Lange called it "not a good deal." German Chancellor Friedrich Merz said it was "the best that could be achieved." Both assessments fit the facts. The deal is worse than the trade relationship Europe had before Trump. A full trade war would probably be worse again.

Where the costs land

German carmakers take the clearest hit. The US tariff on cars rises from 2.5% to 15%, a sixfold increase. Germany shipped roughly 409,000 vehicles to the US in 2025 (Stern). The Center Automotive Research in Bochum estimates the increase will cost German car production about €2.5 billion a year (Handelsblatt).

The pain is uneven even inside the sector. Porsche and Audi, which have no US factories, face the full 15%. BMW and Mercedes, with American assembly plants, can shift production and avoid part of the cost.

That creates its own pressure. The agreement rewards firms that move more manufacturing to America. Over time, that can hollow out parts of Europe's industrial base without any formal decision ever being taken in Brussels or Berlin.

German industry groups are not dressing this up. The BDI, Germany's federation of industries, the VDA, its auto industry association, and the VDMA, the mechanical engineering group, have warned that the deal weakens European competitiveness without winning enough in return. The ifo Institute and the IfW Kiel, two of Germany's leading economic research centres, point to a lasting structural disadvantage for exporters that depend on the US market.

A one-way street

American producers get tariff-free access to Europe's market of 450 million people. European producers pay 15% to reach America. On steel and aluminium, they pay 50%.

Food and drink exporters face the same barrier. French wine, Italian speciality goods and Irish whiskey all sit at the full 15%, with no route to exemption. Agricultural trade was left out of the negotiation. American farm products get improved access to Europe. European food and drink going to the US get no equivalent concession.

The real test comes in December. Washington has seven months to lower the 50% metal tariffs, or the EU can suspend its concessions. The difficulty is that Europe's leverage is fragile.

By early May, Trump was already floating 25% auto tariffs, above the agreement's own ceiling. If the Commission triggers the suspension clause, it risks the escalation the deal was designed to avoid. Europe's only credible exit threat is also the outcome it most wants to prevent. The durability of the Turnberry Agreement depends on nobody deciding to test that weakness.