Von der Leyen and Trump strike EU-US trade deal to avert potentially devastating tariff war

The United States and the European Union struck a tentative trade deal on Sunday to avert a tariff war that would have been devastating for two of the world's biggest economies, after talks at US President Donald Trump's Turnberry resort in Scotland. The two leaders struck a deal in a race against time before a self-imposed deadline of 1 August.

Under the agreed terms of the deal finalised by European Commission President Ursula von der Leyen and US President Donald Trump, the majority of EU exports bound for the American market will be slapped with a 15% tariff.

The deal finally brought months of tense negotiations to an end as the EU is the United States’ single biggest source of imports.

Under the deal, the European Union will invest heavily in American energy and also buy military equipment, Trump said.

US to impose 15% tariff on most European goods

The deal imposes a 15% tariff on most European goods to the US, which is lower than the 30% Trump had previously threatened against the United States’ largest trading partner.

Trump further said that the 27-member bloc has agreed to purchase $750 billion worth of US energy and make investments worth $600 billion in the US.

“It’s a very powerful deal, it’s a very big deal, it’s the biggest of all the deals,” Trump said alongside von der Leyen. “It’s a good deal, it’s a huge deal, with tough negotiations,” von der Leyen said.

‘Biggest deal ever made, will bring stability and predictability’

“I think it's great we made a deal today instead of playing games,” Trump said at the conclusion of the meeting. “I think it’s the biggest deal ever made.”

“We have a trade deal between the two largest economies in the world. And it’s a big deal. It’s a huge deal,” said von der Leyen, adding, “It will bring stability, it will bring predictability. That’s very important for businesses on both sides of the Atlantic.”

President Trump held talks with European Commission President Ursula von der Leyen at his Turnberry resort in Scotland, where he has been golfing this weekend, to strike a tariff deal. Trump said that he has a “50/50 chance” of striking a deal with the European Union this weekend. “That would be actually the biggest deal of them all, if we make it,” he said after landing in Scotland. The meeting between Trump and Ursula von der Leyen began with the US president saying, “We’re here with her very brilliant staff, and hopefully we’ll resolve a few issues.”

The European Commission president flattered President Trump on one of his points of pride in her opening remarks, saying, “You are known as a tough negotiator and dealmaker.”

Trump also spoke highly of Ursula von der Leyen and said that she has “really done a terrific job—for [Europe],” and is “highly respected.”

“Europe is very closed. We don’t sell cars into Europe. We don’t sell, essentially, agriculture of any great degree…We have a rough situation,” said Trump in response to a media query.

The US and EU have the largest bilateral trade and investment relationship in the world, representing almost 30% of global trade in goods and services and accounting for 43% of global gross domestic product, according to EU figures.

‘Iran have been very nasty…was beaten up very badly’

Trump slammed Iran in response to a media query and said, “Iran have been very nasty… Iran was beaten up very badly...for good reason we cannot let them have a nuclear weapon, but they still talk about enrichment. I mean, who would do that? You just come out of something that's so bad and they talk about, ‘We want to continue enrichment.’ Who would say that? How stupid can you be to say that? So we are not allowing that to happen.”

Trump also reiterated his stand against alternative energy and said, “We will not allow a windmill to be built in the United States. They’re killing us. They’re killing the beauty of our scenery ... It’s the most expensive form of energy. It’s no good. They’re made in China.”

Asked if he can “do better” and go lower than a 15 per cent across-the-board tariff rate for the European Union, President Trump said, “No.” European Union officials said they believe that a deal with the United States could be reached in time to avoid the 30 per cent tariffs on European imports that Trump has threatened to impose on Aug. 1. At the start of their meeting, Trump again put the odds of reaching a deal at 50/50.

Trump also said that pharmaceuticals will be treated separately from this deal with the European Union, which would be a big blow for Europe as it was hoping to cap the tariff rate on medicines, which are their number one export to the United States. “Pharmaceuticals are very special,” Trump said.

“This is the biggest deal, people don’t realise,” Trump said, acknowledging how big the transatlantic relationship remains.