The US has secured a trade agreement with the EU, committing the EU to purchase $750 million in energy at a 15% tariff. This gives the US access to the $20 trillion European market, where the EU buys $235 billion from America each year. The EU has two options: move production back to Europe to avoid tariffs or continue paying them. Key areas of focus are the automotive and pharmaceutical industries. Companies wanting to sell in the US must manufacture there, and President Trump is set to launch a new initiative requiring pharmaceutical firms to produce domestically. The EU has agreed to a 15% tariff on select products.

Negotiation Updates

Negotiations continue on various subjects, including digital services and tariffs on steel and aluminum. Trump believes natural resources shouldn’t be taxed and wants open markets with other nations. He is reviewing existing deals to set new terms. China remains a unique challenge, with negotiations expected to conclude by Friday. Looking at today’s market, as of July 29, 2025, our views on the US-EU trade deal have shifted. The focus on aggressive tariffs is no longer at the forefront of trade issues between the US and EU. The previous emphasis on a 15% auto tariff is now in the past. Currently, we are focused on the EU’s Carbon Border Adjustment Mechanism (CBAM), which could affect US exports. In 2024, US goods exports to the EU surpassed $380 billion, highlighting the importance of our ongoing regulatory discussions.

Energy Market Insights

The energy market has evolved significantly. Europe is now the leading destination for US liquified natural gas (LNG), absorbing nearly two-thirds of US exports in the first half of this year—not due to tariffs but necessity. We expect market reactions to depend more on European gas storage and winter forecasts rather than trade policy. Concerns about onshoring pharmaceutical manufacturing have shifted to supply chain resilience and domestic drug pricing laws, which now influence volatility in the healthcare sector. Our strategy is to respond to legislative news from Congress, not threats against European pharmaceutical companies. Digital services taxes, once contentious, have been largely replaced by the OECD’s global minimum tax framework. As this framework is being implemented across much of Europe, the threat of individual country tariffs has decreased. Our attention for big tech derivatives is now on how this new global tax rate affects earnings. Create your live VT Markets account and start trading now.

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