President Donald Trump struck a new trade deal with the European Union on Sunday, allowing the EU to avoid a 30% tariff rate that was scheduled to begin on Aug. 1.
Trump met with European Commission President Ursula von der Leyen over the weekend and discussed the new trade deal, which von der Leyen significantly praised.
“We have a trade deal between the two largest economies in the world. And it’s a big deal. It’s a huge deal,” she said. “It will bring stability, it will bring predictability. That’s very important for our businesses on both sides of the Atlantic.”
This is the latest agreement Trump has made in an effort to restore economic security and stability in the United States. Trump extended his “Liberation Day” tariff pause on July 7 and sent about two dozen letters to trading partners announcing new tariff rates for their countries.
The higher tariffs will begin on Aug. 1 unless the countries can seal a new trade deal with the U.S.
NINETY DEALS IN 90 DAYS: TRUMP’S TARIFF PAUSE CLOUDS ‘LIBERATION DAY’ ECONOMIC FORECAST
Trump’s tariff campaign began on April 2 when he announced “Liberation Day” tariffs on U.S. trading partners. Each country would see at least a 10% baseline tariff, and more than 50 other countries were hit with additional higher rates.
In announcing the new rates, Trump declared a national emergency caused by the “massive U.S. goods trade deficit.” The higher tariffs were needed to correct persistent trade imbalances caused by “a lack of reciprocity” with other countries and “unfair tariff and non-tariff barriers,” according to a White House fact sheet.
The Liberation Day announcement jolted the economy, and stocks tumbled. Trump responded on April 9 by freezing the initial tariffs, except for those imposed on China. The White House said it would use the pause to negotiate with countries directly on new trade pacts, with the ambitious goal of “90 deals in 90 days.” So far, three deals have been announced with China, Vietnam, and the United Kingdom.
The 90-day pause was set to expire on July 9, but Trump extended the deadline to Aug. 1 by way of an executive order. That means the highest rates are on hold — for now.
Trump first sent letters to the following countries announcing their new rates: Cambodia, Laos, Myanmar, Sri Lanka, Iraq, Bangladesh, Serbia, Thailand, Bosnia and Herzegovina, Indonesia, Libya, Moldova, Algeria, South Africa, Tunisia, Kazakhstan, South Korea, Brunei, Japan, Malaysia, Philippines, and Brazil.
An additional letter went to Canada on July 10 announcing a 35% rate on Aug. 1. Trump’s trade standoff with Canada and Mexico pre-dated “Liberation Day” with an order on Feb. 1 for 25% tariffs on the two major trading partners, which has since been modified.
He followed up on July 12 with more letters to Mexico and the EU, proposing a 30% rate.
Here’s everything you need to know about the new trade deals and current tariff rates.
What trade deals have been made?
Trump has negotiated trade deals with the United Kingdom, Vietnam, and China, though the latter deal with Beijing only lasts through the summer as they negotiate toward a more permanent agreement.
He’s struck more deals this summer with the European Union, Japan, the Philippines, and Indonesia.
His most recent agreement with the EU will ensure it purchases $750 billion worth of energy from the U.S., and the EU agreed to invest an additional $600 billion into the U.S., both accomplished by 2028, according to a White House fact sheet.
The EU also agreed to purchase “significant amounts” of U.S. military equipment. A tariff rate of 15% will be implemented on items including automobiles, but a 50% tariff rate will remain on steel, aluminum, and copper.
In his deal with Japan, announced on July 22, Trump was able to negotiate an investment of $550 billion into the U.S. to “rebuild and expand core American industries,” according to a White House fact sheet. The U.S. will keep 90% of the profits from this investment.
Imports from Japan will be subject to a 15% baseline tariff, and the U.S. will see more cooperation from Japan when it comes to access to their market, delivering “breakthrough openings” in key sectors such as agriculture and food, energy, manufacturing and aerospace, and automobiles and industrial goods.
A trade deal with the Philippines was also announced on July 22, in which the Philippines agreed to a 19% tariff, according to Trump.
Indonesia agreed to pay the U.S. a reciprocal tariff rate of 19% in its deal with Trump, along with getting rid of tariff barriers on a preferential basis on more than 99% of U.S. products exported to Indonesia across all sectors, according to a White House fact sheet. Indonesia will also address non-tariff barriers for U.S. industrial and agricultural exports, as well as focus on removing barriers for digital trade.
An agreement was also made with the United Kingdom back in May, which retains the 10% reciprocal tariff rate originally announced on Liberation Day, according to a White House fact sheet.
Highest rates
When Trump announced his “Liberation Day” tariffs in April, the southern African country of Lesotho was singled out for the highest rate of 50%. The tiny nation was followed by Cambodia at 49% and Laos at 48%. However, the proposed tariff rate for Cambodia has since dropped to 36% and for Laos to 40%, per the new trade letters Trump sent.
Since the most recent letters came out, Brazil has the highest tariff rate, jumping from a 10% to a 50% tariff rate starting on Aug. 1. The high rate is partly in response to the prosecution of the country’s former president, Jair Bolsonaro, which Trump has called an “international disgrace.“
Biggest changes
Aside from Brazil, which saw the biggest change in its tariff rate, a few other countries saw higher rates after Trump’s round of letters.
Brunei and Malaysia initially faced a 24% “Liberation Day” rate, but each ticked up to 25%, according to Trump’s letters.
Mexico and Canada started earlier this year with a 25% proposed tariff on imported goods, but now Trump wants a 30% tariff on Mexico and 35% on Canada.
NINETY DEALS IN 90 DAYS: THE DOLLAR HAS DROPPED STEADILY, DEFYING TRUMP TARIFFS
Most of the 25 countries with letters, however, either had a reduction in the threatened tariff rate or retained the same rate proposed in April. Sri Lanka saw a notable change. Its Liberation Day rate was 44%, but after a letter, Trump has now settled on 30% starting Aug. 1
What comes next
More trade deals could come in the coming days and weeks from the Trump administration, as it has been meeting with trade partners to negotiate more agreements. The Trump administration said the higher rates will go into effect on Aug. 1, barring any new deals.
