U.S. and EU spell out tariffs for autos, pharmaceuticals, and more

The U.S. and European Union on Thursday revealed fresh details about their trade framework, including on hotly contested and anticipated pharma and semiconductor tariffs.

After weeks of heated negotiation, Brussels and Washington finally arrived at a trade agreement late last month, setting out 15% blanket tariffs on EU exports to the U.S. Under the deal, the EU also committed to purchase $750 billion worth of U.S. energy and invest at least an additional $600 billion in the U.S.

Many political and business leaders in Europe at the time expressed concerns about the deal being unbalanced. Several questions remained unanswered including on what tariff rate would apply to some goods U.S. President Donald Trump has hit with sectoral duties.

Thursday’s announcement at last shed more details at a time when many other trading partners are still waiting, and negotiating, for similar clarity on their respective trade deals with the U.S.

Key points in the statement include the U.S. committing to “apply the higher of either the U.S. Most Favored Nation (MFN) tariff rate or a tariff rate of 15 percent, comprised of the MFN tariff and a reciprocal tariff, on originating goods of the European Union.”

As of Sept. 1, the U.S. will apply only MFN duties on several goods from the EU, including “unavailable natural resources (including cork), all aircraft and aircraft parts, generic pharmaceuticals and their ingredients and chemical precursors.”

Several so-called Section 232 tariffs have been capped at the wider 15% tariff rate, including those on lumber, semiconductors and pharmaceuticals, according to a senior U.S. administration official. This is sharply below the rates Trump has sometimes threatened, as well as a 100% levy on semiconductors.

Meanwhile, the statement noted that the EU intends to “to eliminate tariffs on all U.S. industrial goods and to provide preferential market access for a wide range of U.S. seafood and agricultural goods.” This was already broadly covered in the initial framework.

The statement also included insights into the EU’s energy purchasing and investment pledges, which previously raised questions about their feasibility and about potential repercussions if the commitments do not materialize.

The latest announcement reiterated figures for planned spending from the EU, including on AI chips, energy, and broader investments in the U.S., but described them as intended and expected, rather than as guaranteed commitments, a senior administration official pointed out.

Thursday’s statement also noted plans for the EU to “substantially” increase its procurement of U.S. military and defense equipment, even as Europe has committed to growing its own defense capabilities.

Notably, the latest agreement does not introduce changes in terms of the EU’s digital services act, which includes regulations for big tech companies and has long been a point of contention in trade talks for Trump.

Europe’s pharmaceutical sector — the U.S.’s top source for pharma imports — will also see tariffs capped at up to 15%. Critically, the rate will not stack on top of other EU-wide tariffs.

From Sept. 1, the Trump administration has also agreed to only apply its MFN drug pricing policy to generic pharmaceuticals. The directive aims to reduce U.S. drug prices by tying them to the typically lower prices paid by other developed nations.

Back in April, the Trump administration had launched a so-called Section 232 investigation on pharmaceutical products to examine the impact of imports on national security. In recent weeks, Trump threatened levies as high as 250% on the pharma sector and sent an ultimatum to major firms demanding that they lower U.S. drugs prices.

The White House leader has long lambasted the sector over what he has dubbed “abusive” pricing practices, while simultaneously urging firms to move their manufacturing operations stateside in an effort to bolster domestic production.

That prompted a flurry of U.S. investment commitments over recent months, including from Novartis, AstraZeneca and Roche, as well as pricing adjustments from Novo Nordisk and Eli Lilly.

The U.S. and EU on Thursday said they had agreed to a conditional 15% tariff for European autos and auto parts bound for the U.S. — but only after Brussels introduces legislation to reduce their industrial duties, according to a senior administration official.

The official added that the mere introduction of EU legislation to reduce the rate of industrial tariffs would be enough to kickstart this trade-off.

“With respect to automobiles, the United States and the European Union intend to accept and provide mutual recognition to each other’s standards,” the U.S. and EU said in a joint statement published Thursday.

Under the terms of the trade framework struck in late July, the EU said it would eliminate the “already low” duties on industrial goods from the U.S.

Speaking late last month, Trump had hailed the initially disclosed framework agreement as the biggest trade deal ever made and one that promised to be “great for cars.”

The prospect of a 15% tariff rate on autos and auto parts represents a substantial reduction from the U.S. president’s threat to impose charges of 30%. It also nearly halves the existing tariff rate on Europe’s auto sector from 27.5%.

Industry groups had previously expressed deep concern about the costs associated with the tariff reality.

The German Association of the Automotive Industry (VDA), which represents more than 620 companies involved in the German auto sector, warned a U.S. tariff of 15% on auto products would “cost German automotive companies billions annually and place a burden on them in the midst of their transformation.”