What the U.S.-E.U. Trade Deal Means for Your Business

Half a loaf is better than none, as the saying goes. That’s the lesson companies can take away from the recently-announced US-EU trade deal. While it might be nice to get back to a world of zero or near-zero tariffs, the “Massive Trade Deal” (officially, the “Cooperation Agreement on Reciprocal, Fair and Balanced Trade”) provided some much-needed relief. Businesses can now live with greater certainty; U.S. businesses can now sell into Europe without the looming threat of tariffs. While European businesses face 15% tariffs in most cases, this is a lower rate than they would have paid absent a deal.

The Massive Trade Deal (yes, we’ll have to call it that) emerged from the Trade War launched on April 2, 2025, which put 20% reciprocal tariffs on EU goods (30% had been threatened). In response, the EU lobbed 25% counter-tariffs on US exports worth €21 billion ($23 billion). The US tariffs took effect on April 15, 2025, but were later suspended for 90 days. In early July, the EU drew up its own list of major retaliatory tariffs of nearly €100 billion, which was later scaled back to €72 billion based on industry feedback. With the extended deadline of August 1 fast approaching, the parties had an incentive to reach a deal—even a sub-optimal one—to salvage the $1.68 trillion trade relationship.

With negotiations coming down to the wire, the Massive Trade Deal was announced on Sunday, July 27, 2025. While the full text is not yet publicly available (and a binding agreement has yet to be signed), here are a few highlights from White House and EU fact sheets:

• Tariffs: There is a “a single, all-inclusive US tariff ceiling of 15% for EU goods,” according to the EU readout (steel, aluminum, and copper are still at 50%).
• Investments and Energy: The EU will purchase $750 billion in U.S. energy and make new investments of $600 billion in the United States, all by 2028.
• Regulations: The EU will address burdens on exporters (including SMEs) and digital trade and make “efforts to eliminate the red tape” (no mention in the EU readout).
• Equipment Purchases: The EU has agreed to purchase “significant amounts” of US military equipment, alongside €40 billion ($46 billion) worth of AI chips.
• Supply-Chain Resilience: The US and EU will “enhance supply chain resilience” and address “non-market policies of third parties” (a likely nod at China).

We’ll need to see the full text of the Massive Trade Deal to understand fully how it will affect different companies and industries. There are, however, some key takeaways for businesses:

1. Tariff Certainty. Companies now have clarity on the rates they’ll be paying:
   1. US exporters will not face higher tariffs when exporting to the EU.
   1. European exporters to the US (and US companies importing from the EU) will need to find a way to absorb higher tariffs (higher rates apply for metals)
2. Risk Allocation and Contracts. Businesses should review supply contracts—particularly sales agreements—to confirm which party is bearing the cost of tariffs. Incoterms and pricing may need to be revised in light of new tariff rates. Companies relying on Delivery Duty Paid (DDP) may find themselves on the hook for tariffs that weren’t priced into their contracts.
3. Dispute Resolution and Enforcement. Since the Massive Trade Deal’s Text is not public, the dispute resolution mechanism is uncertain. Businesses will need to wait for the final deal to see whether there will be binding arbitration.
4. Sector-Specific Issues. Different industries will be impacted differently. US tech firms and defense contractors could see new export opportunities, while auto manufacturers and metals industries face continued headwinds. Pharmaceuticals—the largest EU export to the US—could see a $19 billion hit in additional tariff-related costs.
5. Non-Tariff Barriers. The Massive Trade Deal did not resolve non-tariff barriers. Firms must continue to comply with data privacy, digital services, and other regulations. EU rules such as the Digital Services Act, Digital Markets Act, GDPR, and AI Act remain in full force and effect.

The loaf isn’t fully baked yet. Many EU politicians have been unhappy with the Massive Trade Deal, finding it one-sided. French Prime Minister François Bayrou called it a “dark day for Europe.” The EU retains the “trade bazooka,” or anti-coercion instrument, which some French and German politicians hoped to use to extract better terms. Domestic politics may play a role in subsequent discussions to finalize the terms. For now, however, firms can breathe a sigh of relief and take their half loaves.

Disclaimer: This blog is for informational purposes only and does not constitute legal advice. Reading or interacting with this content does not create an attorney–client relationship. You should consult a qualified attorney for advice regarding your specific situation. Mehaffy, PLLC disclaims all liability for actions taken or not taken based on this blog.