Customs Dispute Resolution: the Pivotal Agreement in Question
The long-standing trade dispute between the European Union (EU) and the United States (US) has come to an end with the announcement of a new trade deal by Donald Trump and Ursula von der Leyen.
The key terms of the deal include the US imposing a 15% tariff on most goods imported from the EU, a rate lower than the previously threatened 30% tariffs. In contrast, American goods entering the European market will be admitted duty-free, creating an asymmetric tariff scenario.
The EU, however, will maintain a 50% tariff rate on US steel and aluminum imports but has committed to purchasing $750 billion in US energy supplies and pledging $600 billion in European corporate investments into the US economy.
Both sides have agreed to address non-tariff barriers in trade, especially in food and agricultural products, with efforts to streamline sanitary certificates and reduce regulatory hurdles for US pork and dairy exports to the EU. The deal also includes commitments to strengthen economic security, supply chain resilience, and innovation cooperation, and to combat non-market policies by third parties.
Cooperation will extend to investment reviews, export controls, and duty evasion. The EU agreed to purchase significant amounts of US military equipment, supporting defense trade ties. The agreement also commits to maintaining zero customs duties on electronic transmissions and to refrain from EU network usage fees on digital trade, aiming to reduce digital trade barriers.
The deal establishes strong rules of origin to prevent third countries from unfairly benefiting from the agreement’s provisions.
The arrangement has sparked broad criticism in Europe, notably in Germany, where politicians condemned the asymmetry—EU exporters face tariffs while US products enter duty-free—and regarded the deal as a "capitulation" or "betrayal" of European interests.
From the US perspective, the deal is hailed as a landmark trade success, expanding market access while protecting American industries and jobs, especially in agriculture, energy, and defense sectors.
The EU was concerned about Trump potentially questioning NATO's military assistance clause again or reducing support for Ukraine. However, the now applicable 15% tariff is considered the best that could be achieved.
The deal marks a significant step in the economic relations between the EU and the US, two of the world's largest economies, which account for nearly 30 percent of global trade in goods and services and 43 percent of global GDP.
- The new trade deal, despite criticism in Europe, particularly Germany, regarding the asymmetric tariff scenario, has been seen from the US perspective as a significant success in the finance sector, potentially protecting American industries and jobs in sectors like agriculture, energy, and defense.
- In addition to reshaping the business landscape between the European Union and the United States, this agreement also includes commitments in politics and general-news sectors, such as cooperation on investment reviews, export controls, and duty evasion, as well as addressing issues like supply chain resilience, innovation, and non-market policies by third parties.
