How to Assess the U.S.-EU Tariff Deal? A Relief for European Firms, But a Slap to EU Sovereignty

TradingKey - After the U.S. and European Union reached a trade agreement on a 15% tariff rate, the euro and European stocks initially rebounded. But as more political leaders and analysts began to recognize the deal as a forced concession by the EU, the euro plunged 1% on Monday, July 28 — its sharpest drop in two months — revealing deepening divisions over Europe’s economic and strategic future.

The Deal: 15% Tariffs in Exchange for Massive Commitments

Announced on July 27 by President Donald Trump and European Commission President Ursula von der Leyen, the agreement includes:

• A 15% tariff on EU exports to the U.S. — far below the 30% threat, but still significant
• A pledge by the EU to invest $600 billion in the U.S.
• Agreements to purchase $750 billion in U.S. energy products
• Additional commitments to buy U.S. military equipment

Initially, markets welcomed the deal as a removal of macro uncertainty, avoiding a full-blown transatlantic trade war. However, the political and economic cost of the compromise has sparked backlash across Europe.

“A Dark Day” for the EU

The agreement has been widely criticized as a strategic surrender, undermining EU autonomy and long-standing principles of trade fairness.

Karin Karlsbro, a Swedish member of the European Parliament’s trade committee said that the principles of free trade that have underpinned transatlantic prosperity since WWII are being systematically dismantled. With every concession, Europe risks economic and political marginalization.

Germany’s Chancellor Friedrich Merz initially welcomed the deal but later reversed course: This agreement will cause considerable damage — not just to Germany, but to Europe and even the U.S. It leads to higher inflation and distorts transatlantic trade. While it may be the best outcome under the circumstances, it is far from satisfactory.

The Alternative for Germany (AfD) party called it not a deal, but a “slap in the face” to European consumers and producers.

France’s Prime Minister François Bayrou described it as a “dark day”, stating that the EU had “resigned itself into submission”.

Business Sees Relief, Strategists See Risk

The U.S. Chamber of Commerce in Europe offered a more pragmatic view, acknowledging that while 15% tariffs significantly raise costs, the deal provides predictability — a relief compared to the threat of 30% tariffs and ongoing uncertainty.

Still, strategic concerns remain. Deutsche Bank warned that the economic and geopolitical costs must not be overlooked:

• Purchasing billions in U.S. military equipment increases Europe’s dependency on American defense suppliers
• The $600 billion investment in the U.S. could divert capital from European innovation and growth, weakening the continent’s long-term competitiveness

Moreover, the agreement lacks clarity on semiconductors and pharmaceuticals — two strategically vital sectors — leaving room for future disputes.

Oxford Economics noted that while the deal removes some downside risks, its lack of detail creates new vulnerabilities, which will need to be thrashed out over the coming weeks, risking new volatility.