The US-EU trade deal announced on 27 July 2025 brings some much needed clarity to global markets amid ongoing geopolitical and trade volatility. It carries significant implications for the US, the EU and the broader global economy, accelerating shifts in trade flows, industrial strategies and geopolitical alignments.
Trade tensions eased, for now
According to the announced agreement, from 1 August 2025 the US would impose a 15% tariff on nearly all European exports to the US, with some exceptions like steel and aluminium which still face 50% tariffs. Meanwhile, the EU would open its market for US imports at zero tariffs, purchase USD750 billion in American energy products and make investments in the US, among other commitments.
The total value of bilateral trade in goods between the US and the EU reached approximately USD1 trillion in 2024, making it the largest trading relationship in the world
Source: Euromonitor International
The deal helps to ease the recently escalated trade tensions between the US and the EU, as President Trump threatened 30-50% tariffs on the EU, and the bloc publicly prepared retaliatory measures in case a deal was not made by the 1 August deadline. While the agreement is still subject to final approval from both sides, a full-blown trade war – a key downside risk for the global economy – seems to be avoided for now.
US energy and manufacturing sectors to benefit from the deal, while recession risk eases
Moderate tariffs on EU goods are less disruptive for American consumers, especially given that the US imported USD665 billion worth of goods from the EU in 2024 – over a fifth of its total imports. US exporters to the EU will also benefit significantly from the deal, as a zero EU tariff will facilitate their penetration in the European markets.
New European investment is expected to stimulate job creation and industrial growth, especially in regions targeted for reshoring and revitalisation. Meanwhile, the continuation of tariffs on steel and aluminium reinforces the Trump administration’s protectionist stance. Costs pressure for US manufacturers that import the materials from Europe would therefore remain relatively high. Sectors such as packaging, automotive and construction are among the most affected by high steel and aluminium tariffs.
The US-EU trade deal is therefore expected to support the US economy by boosting US exports and industrial production, helping to reduce the risk of a recession. Full implementation of Trump’s “Liberation Day” tariffs and retaliation from its trading partners, as depicted in Euromonitor International’s Trump Total Agenda scenario, could bring the US economy into a recession in 2026.
The impacts will be mixed for the EU
Being heavily dependent on trading with the US, the EU is expected to face a more complex set of outcomes. The new 15% tariff is higher than the current 10% in place and may dampen US demand on key goods imported from the EU, such as machinery and industrial equipment, pharmaceuticals, chemicals, and food and beverages. Germany’s automotive industry, on the other hand, would benefit from the new 15% tariff levels, as EU car exports to the US had been subject to a 27% tariff ahead of the deal.
Nevertheless, the impact of the new tariff on European manufacturers’ competitiveness in the US market could stay moderate, given that other major exporters to the US, most notably China, still face steeper tariffs (China faces a 51% US tariff as of 29 July).
For global FMCG companies, the US-EU trade deal offers some short-term clarity, but it also forces a renewed reassessment of supply chains, sourcing models, and market strategies amid ongoing global uncertainty. At the same time, China and other major economies are facing increased pressure to renegotiate trade terms with both the US and the EU, further reshaping the global competitive landscape.
Learn more about the impacts of US trade policy on the global markets in our report, Market Volatility: Risks and Opportunities Ahead.