US and EU announce further details of trade deal — likely to see similar provisions for US-Japan and US-Korea deals
August 21, 2025
By Nate Bolin
This morning, the White House issued a joint statement with the European Union that provides further details on how their bilateral trade deal will be implemented, including timing of U.S. tariff reductions, application to Section 232 auto tariffs, EU investment and energy purchases, acceptance of product standards, and other important topics. See https://www.whitehouse.gov/briefings-statements/2025/08/joint-statement-on-a-united-states-european-union-framework-on-an-agreement-on-reciprocal-fair-and-balanced-trade/
Below is a summary of this broad-ranging document. The US-EU joint statement is likely to serve (at least in part) as a template for similar joint statements by the United States and Japan and/or Korea in the coming weeks as those bilateral discussions continue.
EU Tariff Rates on US products: The EU commits to eliminate all EU tariffs on U.S. industrial goods and provide greater market access for US seafood and agricultural products. The announcement does not provide a date by which this commitment will be carried out.
US Tariff Rates on EU products:
- The United States will apply only the normal customs duty (most favored nation or MFN) rate to the following EU product categories: aircraft and aircraft parts, generic pharmaceuticals and their API or other precursor ingredients, and certain natural resources (e.g., cork) that are not available in the United States.
- All other EU products imported into the United States will receive the higher of either the MFN rate or a 15 percent “all in” tariff. For example, if an EU textile product is subject to a MFN rate of 40%, it will continue to receive that tariff rate only (with no additional 15%). However, if the EU product has a MFN rate of less than 15%, the US will increase the total tariff level to 15%, all-in. This same methodology will also be applied to EU goods that may later become subject to US Section 232 tariffs on pharmaceuticals, semiconductors, and lumber.
- Section 232 Autos/Auto Parts tariffs: When the EU introduces a legislative proposal to enact its own tariff-lowering commitments, the US will reduce Section 232 tariffs on autos and auto parts (currently 25%), so that covered autos and auto parts will receive the higher of the MFN rate or 15%.
- Such Section 232 autos/auto parts tariff reductions will be effective from the first day of the same calendar month in which the EU’s legislative proposal is introduced. For example, if the EU introduces its proposal on September 15, the Section 232 auto/auto parts tariffs will be reduced to 15% effective September 1. Refunds will be made of any such Section 232 tariffs paid between the start of the relevant month and the legislative introduction date, e.g., between September 1 and September 15.
- Section 232 tariffs on steel and aluminum (and their derivative articles): The US and EU will “consider the possibility to cooperate on ring-fencing their respective domestic markets from [global] overcapacity, while ensuring security supply chains between each other, including through tariff-rate quota solutions.” There is no deadline for such considerations and discussions, however, and the current Section 232 tariffs on steel and aluminum of 50% will continue in the interim.
Rules of origin: The US and EU will negotiation deal-specific rules of origin, which may include new/different rules for determining whether a given product is considered to be EU-originating, or whether, for example, the US may nevertheless apply higher tariffs to (for example) the Chinese-origin content of the import.
EU Purchases of LNG, oil and “nuclear energy products”: The EU commits to procure $750 billion of a combination of U.S. LNG, oil, and nuclear energy products with “an expected offtake” valued at $750 billion through the end of 2028.
EU purchases of US AI chips: The EU commits to purchase at least $40 billion of U.S. AI chips. No deadline/timeframe is specified for this commitment.
Cooperation on export controls: The EU and US will work to adopt and maintain technology security requirements based on or otherwise consistent with US export controls to “avoid technology leakage to destinations of concern”. “Destinations of concern” normally includes, in US parlance, China, Russia, and various other countries subject to US sanctions or arms embargoes.
EU investments in the United States: The announcement says that “European companies are expected to invest an additional $600 billion across strategic sectors in the United States through [Dec. 31,] 2028.” No further details are provided, but the emphasis on investments flowing from “companies” supports the conclusion that the investment efforts will mainly be private sector deals that are coordinated, accelerated, or otherwise promoted by the US and EU in close consultation. We expect the US “Investment Accelerator” office at the US Department of Commerce to play a leading role in these efforts.
Defense purchases: The EU will “substantially increase” procurement of US defense equipment. The US will “support and facilitate” these efforts. No dollar goal is specified.
Harmonization of standards and other efforts to reduce “non tariff” barriers:
- The US and EU intend to “accept and provide mutual recognition” for each others auto standards.
- Cooperation on harmonizing other standards is also promised, as is cooperation on accepting safety/chemical testing (“conformity assessments”) and sanitary certificates for certain food products and telecommunications equipment and cybersecurity standards, but no details are provided.
EU environmental and greenhouse gas-related regulations and directives: The EU commits to working towards the following goals:
- Ensuring that the EU Deforestation Regulation (which can impact, e.g., US timber product exports) will not have an “undue impact” on bilateral trade.
- Flexible implementation for US companies with regard to the EU’s Carbon Border Adjustment Mechanism (which in highly-simplified terms charges imports of certain products into the EU a fee/duty based on the greenhouse gas emissions involved in the production of such imports).
- Ensuring that the EU’s Corporate Sustainability Due Diligence Directive and Corporate Sustainability Reporting Directive “do not pose undue restrictions on transatlantic trade” such as by reducing administrative burdens on small-and medium-sized US businesses.
Response to China’s export controls on critical minerals: The US and EU commit to work together to push back on restrictions on critical minerals exports imposed by China and other countries.
Intellectual Property Rights and Anti-Forced Labor Provisions: Similarly, the EU and US commit to work together to ensure protection and enforcement of IP rights and to prevent introduction in their supply
Network usage fees, customs duties on electronic (intangible) transmissions of software etc.: The EU promised not to adopt or maintain network usage fees and both sides agree not to impose customs duties or tariffs on electronic (e.g., internet-based) transmissions of software and other data/services in intangible form.
Efforts to “digitalize” trade and customs procedures: The EU will consult with the US and US trading companies on efforts to digitalize various trade and customs procedures, such as with regard to the use of blockchain technology in meeting customs requirements.
Cooperation on “non-market policies” of China and other third countries: The US and EU agreed to work more closely to strengthen their supply chains and to cooperate closely on addressing non-market economy practices of third parties (such as China), in reviewing in-bound AND outbound investments for national security concerns (e.g., through FDI and CFIUS mechanisms), cooperating on responding to antitrust and government procurement practices of third countries, and in preventing duty evasion.
Further actions by both sides are expected in the coming weeks and months to implement the above commitments. On the US side, it is not currently expected that legislation or any formal trade agreement will be involved. Instead, the US will implement its commitment to forebear from increasing tariffs above the above-stated levels under the same IEEPA legislation used to implement the tariffs and/or under other pre-existing statutory mechanisms such as Section 232 and Section 301.