Breaking Down the New EU-US Trade Agreement

Summary
The recent trade agreement between the EU and the U.S. sets a general tariff of 15 % for most EU goods, which has prevented further escalation. At the same time, the EU has secured certain exemptions for specific goods and has refrained from imposing reciprocal tariffs. However, there is still significant uncertainty around non-tariff trade barriers, regulatory frameworks, and the finer details.

The analysis

The tariff agreement
The 15 % tariff is not ideal but represents a credible and digestible compromise for both sides compared to the earlier threats of much higher tariffs, which is a critically important market for many companies. For Danish companies, especially in the life science sector, the agreement will raise the cost of exports to the U.S., but some generic pharmaceutical products will be exempt, which should soften the blow.

Furthermore, it is important to remember that much of the Danish export to the U.S. is not applicable to tariffs, which you can read more about here.

Among the key areas that the EU successfully avoided tariffs on were semiconductors, critical raw materials, and strategic technological products. Some of these sectors are pivotal to the EU’s ability to compete and its economic viability, which has lessened the damage done to its overall economy.

However, the main issue is that several areas remain unclear – and the messaging from both sides has differed.

Main points of uncertainty are:

• The U.S. Chamber has reaffirmed that discussions about the EU’s non-tariff trade barriers, such as digital service taxes and regulatory standards, which U.S. officials frequently criticize, are very much ongoing and remain unresolved.
• Whether there will be specific targeting of certain pharmaceutical brands, automotive products, and agricultural goods, which leaves room for uncertainty and future negotiations.
• Implementation of the tariffs is also facing practical and legal challenges, with significant portions currently contested in U.S. courts along with questions about how customs authorities will manage the new complexity.

The EU’s choice to refrain from retaliatory tariffs is both prudent and, considering the ongoing stagnation in major European economies (notably Germany), the only viable economic choice. Furthermore, it will help protect EU consumers from rising prices and contain the trade conflict from escalating to a full-on trade war.

Perspectives from the AmCham policy desk

Avoiding a trade war
The trade agreement, while imperfect, represents a practical and strategic compromise, averting the severe tariff escalations previously threatened by the U.S. and securing some sectors for the EU economy. Importantly, it avoids an economically damaging trade war that neither side would benefit from.

From our conversations with officials in Washington, they clearly indicated frustration over persistent European non-tariff trade barriers, notably digital service taxes and strict regulatory standards, none of which are directly addressed in this agreement.

The current deal could be an informal balancing act – accepting tariffs while maintaining regulatory independence in these critical areas. This pragmatic compromise is particularly vital amid the current economic stagnation faced by core EU economies.

The U.S. economy stands strong for now
Additionally, the administration would argue that many have underestimated the U.S. economy, and that despite widespread scepticism and forecasts of impending economic downturns following recent tariffs, the U.S. has maintained unexpectedly strong economic performance indicators – robust GDP growth, stabilized inflation, increased capital investments, and resilient equity markets.

Furthermore, the White House would argue that Trump’s aggressive “anchoring” negotiation strategy, perceived negatively by many, has proven effective, securing advantageous outcomes not only in trade but also in broader geopolitical matters, including NATO contributions.

The future is uncertain
However, according to Goldman Sachs, the U.S. economy may face delayed but significant economic headwinds from the imposed tariffs, notably from mid-2026 onward. These economic impacts are likely to manifest as higher consumer prices and reduced economic growth, highlighting longer-term risks despite currently strong economic performance indicators.

For Danish businesses, especially those exporting high-value goods or with significant U.S. supply chains, the coming months will demand careful monitoring of implementation, continued engagement on regulatory issues, and, if needed, advocacy for further exemptions as the situation evolves.