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LAST UPDATE | 28 Jul
IN A GRAND hall overlooking Scotland’s Ayrshire coast, Donald Trump and Ursula von der Leyen shook hands yesterday on a last-minute deal that prevented a trade war between the United States and the European Union.
The two sides announced the compromise just five days before the US was due to impose 30% tariffs on many European imports.
The new agreement sets a 15% tariff ceiling, applied broadly, though details for specific sectors are still to be clarified.
EU leaders welcomed it as a temporary relief, although few were enthusiastic.
While the agreement stopped an immediate escalation, many EU leaders were uneasy about its uneven outcome.
The European Commission described the deal as a step towards stabilising EU-US trade, with EU trade commissioner Maros Sefcovic telling journalists that it was “the best deal we could get under very difficult circumstances”.
However, France’s European Affairs Minister, Benjamin Haddad, warned the arrangement is “temporary” and “unbalanced”.
French Prime Minister Francois Bayrou similarly slammed the deal in a post on X.
“It is a dark day when an alliance of free peoples, united to affirm their values and defend their interests, resorts to submission,”Bayrou said.
Italy’s Prime Minister, Giorgia Meloni, called the 15% tariff “sustainable for now”, while leaders in the Netherlands and Germany said the deal was necessary, but far from ideal.
Spanish Prime Minister Pedro Sanchez said he backed the deal but “without any enthusiasm”.
Earlier, Belgium’s Prime Minister, Bart De Wever, summed up the mood: “This is a moment of relief, but not of celebration.”
Here, Irish government ministers welcomed the deal, but added that “a lot of detail on the agreement” in relation to the pharma sector needs to be brought forward.
Finance minister Paschal Donohoe has said that no changes will be made to the Summer Economic Statement, which sets the petametres of what the public should expect in the upcoming budget, on foot of yesterday’s announcement.
While his department will look at the agreed framework in the round, the Fine Gael minister said what has been agreed is optimal for both citizens and businesses. Donohoe added, however, that the full details have yet to be properly set out.
Tánaiste and trade minister Simon Harris said the agreement avoided the imposition of 30% tariffs due on 1 August and the prospect of EU countermeasures. He called it “a measure of much needed certainty for Irish, European and American businesses”.
While Fine Gael leader Harris said he “regrets that the baseline tariff of 15% is included”, he acknowledged it was always part of the expected outcome. He also highlighted that a lot of the details still must be clarified, particularly in the pharma and aviation sector.
Trump and von der Leyen’s statement were conflicting yesterday after the US President said pharmaceutical products would not receive a tariff while the EU Commission President said they would.
A senior US official later confirmed that they were in fact covered by the 15% tariff. However, an internal review by the US trade department is ongoing over the legality of placing a levy on medicinal imports.
Under American trade law, essential items, such as medicine and aircraft components, cannot be unfairly taxed over the potential implications it may have on the price of such goods.
Harris today, in a letter to the Irish trade forum, said it was his understanding that should a tariff be placed on pharmaceuticals, the rate would be capped at 15%. Carve-outs, or exclusions, do exist currently, which sees no tariffs on aviation products.
Harris said Ireland had pushed for similar exemptions in as many sectors as possible.
Enterprise minister Peter Burke, who this month said such carve-outs would be important, expressed optimism over the exclusion of certain items.
He said the does not believe tariffs on pharmaceuticals will exceed 15%, though he noted the US is still reviewing the sector under national security grounds. A decision from the internal review at the US trade department is expected in two weeks.
Burke welcomed the avoidance of a “stacking mechanism”, which would have compounded new tariffs on top of existing ones – particularly in the agri-food industry and other low-margin sectors.
Agriculture Minister Martin Heydon welcomed the 15% cap, noting it benefits Irish butter exports that have faced compounded tariffs since April. He echoed the call for clarity on zero-tariff products in the coming days.
Taoiseach Micheál Martin said the agreement provides “clarity and predictability”, which is good for businesses and job security.
He said: “The agreement is a framework, and there will be more detail to be fleshed out in the weeks and months ahead.”
Elsewhere, Ibec CEO Danny McCoy said that while the deal “brings an end to a significant amount of uncertainty”, a 15% tariff “still represents a substantial burden for many industries”.
“Sectors which rely heavily on the US market and operate within small margins, will once again be significantly impacted by an additional 5% tariff, on top of what they have already had to absorb over the past several months and well in excess of the 1% effective tariff which existing before April,” said McCoy.
He noted that “details are still emerging” and that “these details will be critically important for Ireland”.
“Pharmaceuticals and Semiconductors which equate to 75% of Ireland-US trade are, we understand, included in the 15% deal.”
The lack of clarity over pharceuticals has been highlighted by opposition politicians, with Sinn Féin trade spokesperson Donnchadh Ó Laoghaire TD saying that “clearly more detail is yet to emerge that will need to be assessed.
“There is considerable confusion already about pharmaceuticals, obviously a key industry from an Irish point of view, but Trump and Von der Leyen are saying contradictory things,” he said.
Russia and Hungary both condemned the agreement. Russian Foreign Minister Sergei Lavrov said it would speed up Europe’s “de-industrialisation” and shift investment to the US.
Hungarian Prime Minister Viktor Orbán, meanwhile, derided the deal, claiming Trump had effectively overpowered von der Leyen.
“Donald Trump ate Ursula von der Leyen for breakfast,” he said in a party livestream.
Additional reporting from Muiris Ó Cearbhaill, Jane Matthews, Press Association and AFP
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