EU/US joint statement: framework for reciprocal, fair and balanced trade

Background

With continued developments in US trade policy, please see this week’s key updates in our latest round-up on tariffs, global tax and beyond.

The week in summary 

EU-US joint statement

On Thursday 21 August, the EU and US released a joint statement outlining the “Framework on an Agreement on Reciprocal, Fair, and Balanced Trade”. This statement provides much needed clarity on the future trading relationship between the two partners and addresses key sectoral questions which have remained unclear since the July announcement. The key points from the announcement today are as follows; 

• Effective as of 1 September, the US will apply the MFN rate of duty (e.g. the standard rate of duty excluding any “reciprocal tariffs”) to the following products of EU origin;
  • All aircraft and aircraft parts 
  • Generic pharmaceuticals and their ingredients and chemical precursors 
  • Unavailable natural resources (including cork)
• Where, in the future, the US imposes additional tariffs on pharmaceuticals, semiconductors and lumber under the remit of Section 232 investigations – this rate shall go no higher than 15% for EU origin goods, irrespective of the rate which is applied to other countries. 
• The EU will eliminate tariffs on all US origin industrial goods and provide preferential market access to seafood and agricultural products. 
• Upon enactment by the EU of the elimination of tariffs on US goods, the US will reduce the tariff which is applicable to automobiles and automobile parts originating in the EU. This tariff will be either;
  • 15% if the MFN rate is less than 15% 
  • MFN% where the MFN rate is higher than 15%
• With respect to steel, aluminium, and their derivative products, the EU the US intend to consider the possibility to cooperate on ring-fencing their respective domestic markets from overcapacity, while ensuring secure supply chains between each other, including through tariff-rate quota solutions.
• Commitment by both sides to work together to address non-tariff barriers in a number of sectors including a review of possible flexibilities in respect of CBAM implementation. 

While the joint statement has provided much need clarity on timelines for the implementation of specific exclusions and the future with respect to pharmaceuticals, a key sector which has not been included is the alcohol sector and, thus, EU exports will face the 15% tariff rate for their goods entering the US. However, with the joint statement containing the agreement to consider expanding the scope of exclusions (text below), alcohol may yet be included at a later date. 

The United States and the European Union agree to consider other sectors and products that are important for their economies and value chains for inclusion in the list of products for which only the MFN tariffs would apply.

EU and Irish reaction

Maroš Šefčovič, European Commissioner for Trade, has responded positively to the joint statement labelling it as “fair, balanced, and mutually beneficial”. The EU has expressed its intention to expand the scope of the preferential trade regime to additional products in future negotiations. Mr. Šefčovič characterised the agreements as a foundational milestone stating;

“But this is not the end. It is the beginning. This framework is a first step – one that can grow over time to cover more sectors, improve market access, and strengthen our economic ties even further.”

Tánaiste and Minister for Foreign Affairs and Trade, Simon Harris, welcomed the publication of the EU/US trade agreement, noting that it offers much needed clarity regarding the unified 15% tariff on EU-origin goods. In his remarks, Minister Harris underscored specific provisions within the joint statement, including “zero for zero” tariff carve-outs for aircraft and aircraft parts, with additional exemptions to be determined for selected products in generic pharmaceuticals and chemical sectors. Minister Harris also highlighted the inclusion of pharmaceuticals within the scope of the agreement stating;

“This provides an important shield to Irish exporters that could have been subject to much larger tariffs pending the outcomes of Section 232 US investigations into these sectors”

Minister Harris concluded by emphasising the forward-looking nature of the agreement, remarking;

“Importantly, the Joint Statement leaves the door open for negotiation of further tariff reductions in the future on products of strategic common interest,”

US expands tariffs on steel and aluminium derivative products

On Tuesday, 19 August, The United States expanded the scope of its tariffs on steel and aluminium, according to a statement from the Department of Commerce. This extension now encompasses hundreds of additional products containing these metals, including items such as child safety seats, tableware, and industrial machinery. The Bureau of Industry and Security announced the inclusion of 407 new product categories to the list of goods classified as ‘derivative products’ of steel and aluminium. As a result, these items are now subject to a 50% tariff on their steel and aluminium components, consistent with the duties imposed earlier in the year under the administration of President Trump. The full details have been published in the Federal Register, with the US Commerce Department stating: 

“This action now covers a broad range of goods, including wind turbines and their components, mobile cranes, bulldozers, railcars, furniture, compressors, pumps, and numerous other items,”  

Jeffrey Kessler, Under Secretary of Commerce for Industry and Security, emphasised that the expansion is intended to prevent circumvention of existing trade measures and to reinforce support for domestic steel and aluminium industries stating that the move “shuts down avenues for circumvention” stating,

“This measure significantly extends the application of steel and aluminium tariffs and closes potential loopholes for circumvention; it reinforces our commitment to revitalising the American steel and aluminium sectors.”

The newly implemented tariffs will take immediate effect and now apply to a broader range of goods, including compressors, pumps, and metal components found in imported cosmetics and personal care packaging, such as aerosol containers.

EU business reaction to tariff uncertainty

Drumshanbo Gunpowder Irish Gin is set to deepen its commitment to the US market, despite the recent implementation of a 15% tariff on EU imports introduced by President Donald Trump. Pat Rigney, co-founder of The Shed Distillery in County Leitrim reaffirmed the company’s strategic focus on the US. Rigney emphasised that the distillery will intensify its efforts across marketing, innovation, and direct market engagement.

“We’ll be increasing our investment in marketing, we’ll be increasing our innovation and we’ll be spending more time in the marketplace here. This is not a time for armchair marketing, you have to be on the streets and you have to support your partners,”

In recognition of the impact which these tariffs may have on Irish business, Enterprise Ireland, the agency responsible for the development and growth of Irish enterprises in world markets, have announced a specific new grant of up to €35,000 to allow companies carry out market research in the face of US tariffs will be rolled out following the EU-US trade deal. As per Enterprise Ireland, this grant supports companies to “undertake market research to address knowledge gaps about a market and the trading conditions that apply” with a specific focus on the “need for companies to research the impact of tariffs and other trade measures on their business”. 

The Local Enterprise Office in Wicklow is urging businesses across the county to take proactive steps in response to the new EU-US tariff agreement, which came into effect on 7 August. A comprehensive suite of resources is available, including access to export consultants and specialised customs training, designed to help businesses navigate the evolving trade landscape and strengthen their operational capabilities. Vibeke Delahunt, Head of Enterprise at Local Enterprise Office Wicklow, commented:

“This new agreement provides a foundation for businesses to begin planning with a degree of stability. While many details are yet to be clarified—particularly regarding sector-specific implications—it is important that businesses start preparing now.”

We’re here to help you

Keeping up to date with US trade policies, trade agreements and new and existing tariff reviews which may lead to further tariff measures is crucial to assessing the risk to your supply chain and the impact these tariffs may have. Understanding your product portfolio and the impact that tariffs may have on your imports is an important first step. We are here to support your business with this analysis and navigating these choppy waters.