By Sabri Khelil | Brussels, European Union

On 27 July, US President Donald J. Trump and European Commission President Ursula von der Leyen struck an agreement on tariffs, in what was labelled by the former as the “biggest trade deal ever made”. This came after several rounds of negotiations between the two blocks, following a long line of threats made by the US President to impose up to 50% tariffs on imports coming from the European Union. In the end, both sides committed to establishing a single, all-inclusive maximum US tariff of 15% for EU goods, which came into effect earlier this month.

But what does this translate to for different European sectors? How will Europe’s industry be impacted by these new tariffs? And can this ‘deal’ truly be labelled as one?  

The Grayling Brussels team has compiled a list of key European sectors and how they will be impacted by this new trade deal.

1. Good news for European car manufacturers

Since April, tariffs were much higher for cars and car parts, reaching a whopping 27.5%, to the detriment of Europe’s automotive industry especially in countries like Germany. For context, the US is the second largest market after the UK for vehicle exports from the EU. Nearly 750 thousand new EU-made cars were exported to the US in 2024, which amounts to around €38.5 billion, with €5.9 billion of that coming from the sale of battery electric vehicles. In contrast, the US exported almost 165 thousand cars to the EU, which amounts to around €7.7 billion in 2024.

For the auto industry, the tariffs will drop to 15%, only as long as EU tariffs on US industrial goods are removed completely (going from 10% to 2.5% effectively). However, this new rate will still bare a blow to the German auto industry.

2. Great wins for aviation

All aircraft and aircraft parts will be exempt from tariffs and will only face the standard Most Favoured Nation tariff (MFN), close to 0%. In other words, this represents a great win for the aviation industry which will see a return to zero-for-zero tariffs on civil aircraft and associated parts effective 1 September.

3. More American energy imports

At the heart of this deal is the EU promise to purchase $750 billion in US energy products (LNG, oil, and nuclear) until the end of 2028. The US would effectively replace Russia as Europe’s principal supplier in LNG, with purchases of up to $250 billion per annum until the end of Trump’s second term. This would not be an entirely new scheme for Europe: during Trump’s first term, the EU had promised to buy considerable amounts of US LNG, increasing imports by 181% compared to pre-2018 levels.

4. More American military and defence supplies

Another key element in the agreement is to increase its purchases of . While the terms are not yet as clear, the EU vowed to substantially increase its purchases of US military equipment by “vast amounts”, separate from NATO funding. The EU is already heavily reliant on American military equipment, buying almost two-thirds of its arsenal from the US. It is unclear what this new spending will look like, especially as the European Commission does not have competence in the area of military spending.

5. Bad news for pharmaceuticals and semiconductors

Pharmaceuticals aren’t exactly exempt from this deal either. Generic pharmaceuticals, however, will only face the standard MFN tariff of roughly 2.5% which was already in place during the Biden administration. This will also include the chemical precursors and ingredients used for these products.

A 15% cap was also put on semiconductors, conditional on the EU eliminating tariffs on all US industrial goods.

The tariffs on pharmaceuticals and semiconductors will come into effect on 1 September.

6. Transatlantic Tech convergence

The EU promised to procure at least $40 billion in US AI chips from American data centres. Both also agreed to conduct joint work on digital trade, including the assurance of no network usage fees and the support for a WTO moratorium on e-commerce duties.

They also vowed to pursue mutual recognition in terms of cybersecurity standards, intending to work together to adopt and maintain aligning technology security requirements and standards. In practice, this basically means that the EU will make sure its requirements and standards are in line with those from the US.

Overall, no specific tariffs here, although President Trump has threatened further tariffs and export restrictions on countries targeting American tech firms. The main legislations in his visor: digital taxes overall, the Digital Markets Act and Digital Services Act.

7. Wines and spirits lose out

To several Member States’ concern and dismay, wines and spirits will face the new standard 15% tariff ceiling, a departure from the previous zero-for-zero tariffs on the majority of spirits. The European Commission has, however, indicated that it will keep pushing for a better rate in the months to come, announcing a 6-month suspension of retaliatory tariffs on US imports which includes wine and spirits.

Closer relations with a price tag: the road ahead in formalising and finetuning

In the end, this trade ‘deal’ enabled the EU to prevent a full-blown trade war with the US in an already challenging time in relations between the two – a reflection of broader shifts in international relations. The tariff ceiling rate tripled compared to the approximately 5% prior to Trump’s second term, making this more of a win for Trump than the EU. This illustrates the argument that the deal remains largely a way for Europe to prevent a worse outcome. On top of these new tariffs, European companies are also expected to invest up to $600 billion in US strategic sectors through 2028.

Member States have responded to the deal quite differently, with countries like France hoping for a firmer retaliatory stance, while Germany and other export-reliant economies preferred caution to avoid a damaging trade war. It is important to remember that these tariffs are part of a wider pattern affecting multiple US trading partners like Canada and Japan, not just the EU which begs the question of why the EU did not turn to its other partners for multilateral coordination on trade.

In the months to come, the US and EU will move to formalise the deal into a comprehensive trade agreement. In parallel, technical discussions will continue to refine exemptions to the tariff ceiling and expand market access in additional sectors. Beyond tariffs, the EU and US have committed to regular engagement on supply chain resilience, regulatory alignment, and cooperation in areas such as digital trade, energy security, and critical raw materials. In practice, this means that implementation will unfold in stages over the coming months and years, with further negotiations expected to deepen and broaden the scope of the agreement. On top of this and in order for the agreement to take effect, the Commission will need approval from the Council and Parliament (which must sign off on removing duties on US industrial goods). So far, neither of these institutions have given their approval, with the European Parliament being very divided on the issue. The differing positions on the Member States’ side will also complicate things at the Council.

Lastly, as a reminder that domestic events in the US should not be forgotten as a part of the trade equation, as the Trump administration will need the approval of Congress to impose tariffs. Last Friday 29 August, a US federal appeals court ruled that Trump’s tariffs against Canada, China, and Mexico were an overreach of his presidential emergency powers, declaring them as unlawful and invalid as the President did not receive Congressional approval to impose them. This could impact the legality of Trump’s tariffs on Europe. Furthermore, with midterm elections coming to the US in November 2026, Trump’s base could suffer a blow depending on future developments. While is it too early to predict at this point, this could influence tariffs for Europe, especially after 2028.

In short, both the EU and US will likely need to further negotiate, both internally and between one another, in order for a full implementation of this political agreement, which is so far not legally-binding. To put it bluntly: this ‘deal’ is far from over.