President Donald Trump and European Commission President Ursula von der Leyen on July 27 finalized a new trade agreement between the United States and the European Union (EU) establishing a baseline 15% tariff ahead of the August 1 deadline.

Agreement Highlights 

• Under the agreement, the United States will impose a 15% import tariff on most EU goods, down from the previously proposed 30%.  
• The new tariff rate applies broadly across categories such as industrial machinery, textiles, some automotive components and consumer goods.
• Pending further negotiations, a set of targeted product categories has been excluded from these new tariffs affecting "strategic" goods like airplanes, aircraft parts and semiconductor equipment.
   

Automotive Sector Implications

Critical raw materials are temporarily exempted from tariffs under the new deal. The scope of these exemptions will be revisited in follow-up negotiations scheduled for later this year.

The 50% tariffs previously imposed under Section 232 on steel and aluminum imports from the EU remain in place. However, both sides have agreed to open discussions on potentially converting those tariffs into a quota-based system. This is of relevance to manufacturers and importers of chassis, wheels, engine components and other parts that incorporate raw steel and aluminum.

European Union manufacturers remain concerned about tariff impacts on vehicle exports. While finished vehicles are not explicitly carved out from the 15% rate, individual member states such as Germany and Italy have confirmed they are in talks with United States trade officials to explore potential product-specific relief mechanisms. Of particular interest to the specialty aftermarket is the development of customs classifications and harmonization standards under the updated regime.

EU Commits to Spending on U.S. Goods and Investments

As part of the agreement, the EU has committed to purchasing approximately $750 billion worth of American goods over the course of Trump's second term, with emphasis on energy products, semiconductors and related technologies. These purchases are expected to include liquefied natural gas, crude oil and nuclear energy technology, and could result in increased investment in United States-based infrastructure and logistics.

In addition, the EU has pledged to invest roughly $600 billion in the United States economy, including in advanced manufacturing, critical materials and supply chain resilience. Industry stakeholders should watch for opportunities stemming from joint EU-American infrastructure and technology investment programs.

What's Next? 

Although the agreement provides short-term certainty for United States–EU trade relations, details remain fluid. Product-level tariff implementation schedules, customs rule adjustments and enforcement mechanisms are expected to be released soon. 

Stakeholders are encouraged to regularly review PRI and SEMA's government affairs communications for additional guidance by the Office of the U.S. Trade Representative and the U.S. Department of Commerce. 

The agreement also outlines plans to coordinate policy on steel and aluminum supply and address overcapacity as part of a new United States–EU "Metals Alliance." The strategic goal is to counter the impact of non-market economies such as China. This initiative could have long-term implications for raw materials pricing and availability within the automotive supply chain.

As negotiations evolve and implementation guidance is issued, PRI and SEMA will continue monitoring developments and providing members with relevant updates and analysis.

Questions? Please contact Juan Mejia, SEMA senior manager for federal government affairs, at jmejia@sema.org. 

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