On Wednesday (May 27), EU Member States at the Council cleared legislation to remove import duties on a range of US goods, bringing the EU one step closer to implementing its side of a trade arrangement agreed with Washington last year. This move is expected to prevent Trump’s threats of higher tariffs on EU cars and other products and further stabilise EU-US trade following recent uncertainty.
Importantly, Member States’ endorsement follows a provisional political agreement reached between the Council and the European Parliament during trilogue negotiations on 20 May.
Last July, under a deal with the US, the EU agreed to remove import duties on US industrial goods and grant preferential access to US food produce, while accepting US tariffs on most EU goods. In return, the US capped tariffs on most EU goods at 15%, avoiding far higher rates which had previously been feared.
However, the EU had yet to fully implement its side of the arrangement, which prompted Trump to announce he would impose ‘much higher tariffs’ on EU goods if the EU does not implement its commitment by this July. Such a threat carried significant economic consequences for some of Europe’s most important industries, including the automobile sector. An increase from 15% to a higher rate would have severely damaged European competitiveness in the US market.
Following this ongoing pressure, EU member states have now cleared legislation to put in place those import duty reductions. It is fair to assume that European governments understood that preserving stable access to the American market outweighed any political objections to accepting the arrangement.
The agreement must still be approved by the European Parliament, which is expected to approve and ratify the agreement on 16 June. If MEPs give their consent, the agreement could then formally enter into force by late June or early July.
At the same time, however, this episode has highlighted Europe’s push to broaden its trade relationships. Brussels recently finalised a major trade agreement with Mexico and is intensifying efforts with India and Southeast Asian economies. It appears that European policymakers are becoming increasingly opposed to excessive dependence on the US market at a time when American trade policy has become much less predictable.
In a separate event, the Dutch government recently blocked the takeover of Dutch company Solvinity by US company Kyndryl, because Solvinity helps run the Netherlands’ essential digital identity platform used by its citizens to access a variety of essential services. Dutch authorities argued that allowing a foreign company, in this case an American tech firm, to control sensitive digital infrastructure could create risks to national security and, more generally, public interest. On Monday (25 May), the Dutch government decided to block the acquisition. This move reflects broader European concerns about dependence on US technology companies, and could possibly become a trend across the rest of Europe.
EU governments clearing the US trade deal legislation reflects the importance of maintaining stable economic relations between the two major global trading partners. While the agreement reduces the risk of escalating tariffs and market uncertainty, it also demonstrates the EU’s broader focus on protecting key industries. Overall, the deal highlights the balance between international cooperation and national economic interests in a changing global economy.
