The deal averted an escalation in the customs dispute with Donald Trump: On July 27, EU Commission President Ursula von der Leyen and the US President agreed in Scotland on an agreement that provides for a basic tariff rate of 15 percent for most EU imports to the United States.
But 100 days later, the EU is divided and business is heavily critical of the agreement, which the European Parliament and the member states are currently dealing with in a regular EU legislative process. Before Trump, Europe had made itself too small, for example when it came to import relief for many US products. While Trump sometimes threatens new tariffs, the consequences of his policies have long been noticeable.
Crash in exports
Although the economy in Europe is growing slightly and is more robust than expected, the German economy, which has strong exports, is under pressure. In August, exports to the USA fell for the fifth month in a row. The new tariffs make once profitable business models less attractive, says the president of the foreign trade association BGA, Dirk Jandura. “We are seeing some retailers turning away from US business.” For the export nation Germany, where almost one in four jobs depends on exports, the tariffs are a burden. How they affect important industries and consumers.
Auto industry
The auto industry was actually supposed to be the biggest beneficiary of the deal. Ultimately, US tariffs on cars from Europe fell from 27.5 to 15 percent from August 1st, although it took until the end of September for this to come into effect retroactively. The industry association VDA is still not really satisfied. Because 15 percent is six times the 2.5 percent that previously applied.
VDA President Hildegard Müller therefore sees “continues to be a significant challenge for the German automotive industry”. There would also be burdens from additional tariffs on a number of steel and aluminum products as well as additional taxes on commercial vehicles, buses and parts. “These additional tariffs, which will apply from November 1st, will hit European commercial vehicle manufacturers hard,” warns Müller.
In addition, Europe’s car manufacturers may have to prepare for stronger competition from the USA: In return for the lower tariff rate, the EU must allow US cars into Europe duty-free. Previously, the import duty was 10 percent. German manufacturers such as BMW, which also produce SUVs for the European market in the USA, are also likely to benefit from the reduction.
Trade and consumers
According to the German Trade Association (HDE), no price increases have been observed in retail due to US tariffs. However, it is too early for a final assessment as the deal has not yet been formally implemented at EU level, said Managing Director Stefan Genth. Increased taxes on US products are currently suspended – good for consumers.
The tariffs are depressing sentiment but have little impact on consumer behavior, said Katharina Gangl, director of the Nuremberg Institute for Market Decisions. And market expert Thomas Els from Agrarmarkt Informations-Gesellschaft does not yet see any impact on prices or purchasing behavior when it comes to fresh food.
BGA President Jandura can imagine that some prices for consumers will even fall if certain US goods are allowed to be imported into the EU duty-free. However, this depends on the outcome of the negotiations.
Mechanical engineering
The mechanical engineering association VDMA sees itself completely ripped off by the customs agreement. The reason: On top of the 15 percent basic tariff for machines, the Americans add an additional 50 percent tariff for the steel and aluminum contained in many products. According to the VDMA, this practice will be expanded to include other products from December. In addition to the increased final prices, which are unclear until import, there is also a complex customs bureaucracy with extensive obligations to provide evidence of, for example, the origin of the metal processed. In view of the tariff conflict, growing competition from China and the weakness of its industrial customers, the majority of the industry is expecting declining or stagnating sales.
Pharma
US tariffs are the issue in the German pharmaceutical industry, which delivers around a quarter of its exports to the USA. Drug prices there are much higher than in Europe. In the USA, pharmaceuticals worth around 600 billion dollars (around 519 billion euros) are expected to be sold in 2025, more than twice as much as in Europe, according to the industry association VFA. There are therefore great concerns about US tariffs on medicines from the EU, for which an upper limit of 15 percent should apply. The pharmaceutical industry is still benefiting from the back and forth in the trade dispute: This year, sales, production and investments are expected to increase by around three percent – also because exports to the USA were brought forward due to fear of tariffs and redirected deliveries to the original recipient countries are now being made up for. The VFA expects worse business in 2026.
Chemistry
The tariff dispute is just one concern here – alongside expensive energy, weak demand and a global oversupply of basic chemicals. From January to August, sales in the chemical industry in Germany fell by 2.9 percent, and things also went down abroad. “The slump in orders was particularly evident in North America, where new US tariffs made sales even more difficult,” said the industry association VCI. In 2024, the chemical industry delivered products worth 10.2 billion euros to the USA, a share of around 8 percent. The chemical industry is showing restraint regarding its business overall. Production is expected to fall by two percent in 2025. “There are currently no signs of a trend reversal in either domestic or international business.”
Are Trump’s tariffs even legal?
Meanwhile, there is resistance to Trump’s tariff policy in the USA, including a dozen states that have sued against it. There are now two cases being dealt with together before the Supreme Court of the United States, which is supposed to clarify the central question: Can the president also impose tariffs when the aim is basically to regulate imports in a state of emergency? It is unclear what specific impact the outcome of the process could have on the trade agreement between the EU and the USA. The next hearing before the US Supreme Court is scheduled for November 5th.