MEPs back EU-US trade deal – with conditions attached

Dr Totis Kotsonis of Pinsent Masons was commenting after the European Parliament voted in favour of proposed new EU legislation which would give effect to new tariff arrangements relating to certain US imports into the EU market.

The legislation, which has yet to be finalised, is designed to ratify terms of a trade agreement reached between EU and US negotiators last July at Turnberry, a Scottish golf resort owned by US president Donald Trump.

Under the Turnberry deal, most tariffs on US industrial goods imported into the EU would be reduced to zero, while further preferential tariff rates would apply to a range of other US products, including seafood and agricultural goods. In return, the US committed to a blanket 15% tariff on most goods imported from the EU. While products such as steel and aluminium are outside the scope of the agreement and would continue to attract a higher tariff upon import to the US, the arrangements would cover products such as cars, semiconductors and pharmaceutical goods.

Since the deal was struck last summer, however, the US position on tariffs has changed. Earlier this year, the US Supreme Court ruled that US president Donald Trump cannot rely on the International Emergency Economic Powers Act (IEEPA) to unilaterally impose tariffs on US imports. This was the basis on which he agreed the deal on tariffs with the EU, among other jurisdiction-specific tariff arrangements he has put in place.

In response to the ruling, Trump moved quickly to announce a blanket 10% tariff would be applied to US imports from around the world, subject to limited exceptions – including for pharmaceutical products, critical minerals and vehicles. Those measures are only in place for 150 days – they are due to expire on 24 July 2026. Trump has signalled his intention to raise the blanket rate to 15% but has not yet applied that change. It is not yet clear what his long-term policy on tariffs will be once the current measures expire.

Kotsonis said: "Despite some initial talk that the European Parliament would delay ratification given concerns about the lopsided nature of the trade deal between the US and the EU as well as the subsequent US Supreme Court decision to strike down as unconstitutional the so-called ‘liberation day’ tariffs, ultimately MEPs opted not to complicate things further and approved the deal – but did so only after incorporating certain amendments that are meant to act as safeguards, given concerns about the unpredictability of the US position.”

“Amongst other things, there is a so-called sunrise clause according to which the preferential tariffs for US products would only be implemented once the US implements fully its own ‘Turnberry deal’ commitments. There is also a sunset clause which effectively means that the EU’s tariff concessions to the US will automatically expire on 31 March 2028 unless the European Parliament decides otherwise. Perhaps not surprisingly, it has also inserted a clause which provides for the suspension of the deal if the US threatens again – as it did in relation to Greenland earlier this year – the EU's territorial sovereignty,” he said.

“Ultimately, the EU’s primary goal is to ensure predictability in its trade relationship with the US. Whether that would be achieved remains to be seen,” Kotsonis added.

The European Parliament’s vote enables final negotiations to take place between EU law makers on the legislative texts for ratifying the EU-US trade deal. Both the parliament and the Council of Ministers will have to agree on, and then formally adopt, the final wording of the legislation to give effect to the deal.