EU–US trade deal: a strategic compromise to prevent tariff escalation under tight scrutiny

The compromise reached on 20 May between the Council of the European Union and the European Parliament on the ratification of the Turnberry Agreement signals a new phase in EU–US trade relations. While it suggests a transatlantic easing of tensions, the agreement is fundamentally built on a risk management strategy: limiting the threat of renewed US trade protectionism while preserving the EU’s ability to respond if commitments are not honored.

Key figures

• 15% vs. 0%: the two tariff ceilings at the core of the EU–US trade agreement
• 31 December 2026: the deadline set for full compliance by the United States
• 31 December 2029: the scheduled expiration date of the agreement unless formally extended

Avoiding a return to a transatlantic trade war

Finalized in summer 2025 amid threats by Donald Trump to impose tariffs of up to 30% on European exports, the Turnberry Agreement capped tariffs at 15%. In exchange, the European Union agreed to eliminate duties on US industrial imports and expand market access for agricultural and agri-food products.

Despite strong criticism within Europe over its perceived imbalance, the agreement follows a pragmatic approach: stabilizing trade flows, protecting European exporters, and avoiding a more damaging trade conflict scenario.

Safeguards against potential US non-compliance

A defining feature of the EU’s approach is the inclusion of robust trade safeguards within the agreement. Three key mechanisms support this framework:

• a suspension clause in case the United States fails to respect the 15% tariff cap, whether through new tariffs or insufficient reductions to existing ones—particularly on steel and aluminum derivatives, where tariffs can still reach up to 50%. The EU has set 31 December 2026 as the compliance deadline.
• a safeguard mechanism allowing the EU to act if rising imports significantly harm European industries.
• a sunset clause stating that all concessions will expire on 31 December 2029 unless the agreement is formally extended.

The result is a flexible, conditional, and reversible EU–US trade agreement.

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A more fragile European trade calculation

Since its signing in 2025, the geopolitical and legal environment has shifted. A ruling by the US Supreme Court on the use of the IEEPA¹ has limited the Trump administration’s ability to immediately impose sweeping tariff increases.

This development has reduced the relative advantage of the agreement for Europe. The so-called “Turnberry discount”, the favorable tariff gap between the EU and other global partners (excluding China), declined significantly from 4.4 percentage points in September 2025 to 1.4 points in March 2026.

However, trade tensions remain unresolved. Continued US pressure on the automotive industry and the possibility of new trade actions later in the year suggest that the risk of escalation is still present.

Mixed impact across key economic sectors

For European manufacturing, the impact is uneven. The automotive sector highlights this complexity: EU exporters benefit from reduced US tariffs (15% instead of 25%), but face increased competition within the European market.

In agriculture, EU concessions are more targeted, including tariff reductions on processed goods and quota-based access for sensitive products such as dairy, balancing trade liberalization with sector protection.

 Olivier Rozenberg, political analyst at Coface.

^{1 International Emergency Economic Powers Act}