Trump backs off higher tariffs for E.U. pharma and chips
The United States has agreed to limit tariffs on pharmaceuticals, lumber and semiconductors imported from the European Union to 15%, according to an agreement released Thursday.
President Donald Trump recently threatened the European pharmaceutical industry with tariffs as high as 250% and the region’s semiconductor industry with tariff rates as high as 100%.
The announcement comes as Trump’s global trade agenda takes shape weeks after his administration locked in tariff rates for imports from dozens of countries. Economists warn that the tariffs, a tax on goods paid by importing companies, are fueling persistent inflation. The Trump administration has touted tens of billions of dollars in revenue from the duties.
In the framework E.U. trade agreement, the United States said it plans to roll back tariffs on “unavailable natural resources (including cork), all aircraft and aircraft parts, generic pharmaceuticals and their ingredients and chemical precursors” to pre-January levels starting Sept. 1.
Ireland, an E.U. member state, is one of the top sources of pharmaceutical imports for the United States. The pre-January tariff rate on aircraft imports was zero. The European Union, as a whole, is the United States’ largest trading partner.
The deal includes a promise from the E.U. to buy energy and artificial intelligence technology from the United States.
“The European Union intends to procure U.S. liquified natural gas, oil, and nuclear energy products with an expected offtake valued at $750 billion through 2028. In addition, the European Union intends to purchase at least $40 billion worth of U.S. AI chips for its computing centers,” the statement reads. That echoes what Trump and European Commission President Ursula von der Leyen announced last month when they first announced the contours of the deal.
The announcement also says, “European companies are expected to invest an additional $600 billion across strategic sectors in the United States through 2028.”
Trump has framed the dollar figures for Europe’s energy and investment intentions as firm commitments, but the document the United States and the E.U. agreed to clearly says they are only expectations spanning the next three years. But Trump touted the deal to CNBC in early August as “a gift” that the United States does not have to pay back.
Trump added that any government that did not follow through with the promised investments or purchases would immediately face higher tariffs.
“The details are $600 billion to invest in anything I want,” he said on CNBC.
The E.U.’s blanket “reciprocal” tariff will remain 15% as part of the announcement. That rate already took effect on Aug. 7. The United States also plans to reduce auto tariffs on European imports, but only after the E.U. introduces legislation to lower its industrial tariffs.
A senior administration official told NBC News that introducing the legislation would be enough to enact the lower auto tariffs.
The two sides also say they plan to cooperate on restrictions other countries have imposed on critical mineral exports and work together on digital trade barriers.