The US secured an EU trade agreement, with the EU committed to $750 million in energy purchases under 15% tariffs. The US now accesses the $20 trillion European market, with the EU annually buying $235 billion from America. The EU can either bring production onshore to eliminate the trade deal or continue to pay tariffs.
Key points include the automotive and pharmaceutical sectors. Businesses wishing to sell in the US must produce there, with Trump planning a new initiative requiring pharmaceutical companies to manufacture domestically. The EU has agreed to the 15% tariff on certain products.
Negotiation Updates
Negotiations are still in progress, covering digital services, and steel and aluminium tariffs. Trump acknowledges natural resources shouldn’t face tariffs. He seeks fully open markets with other countries and is reviewing deals to set terms.
China remains a distinct issue, with negotiations anticipated to conclude by Friday.
We see that this older perspective on a potential US-EU trade deal focused heavily on tariffs and forced production. However, looking at the market today, on July 29, 2025, the dynamics have fundamentally changed. The aggressive tariff-based approach is no longer the central driver of transatlantic trade volatility.
The previous focus on a 15% auto tariff is now a historical footnote for us. Instead, we are watching the ongoing negotiations around the EU’s Carbon Border Adjustment Mechanism (CBAM), which could impact US exports. For context, US goods exports to the EU totaled over $380 billion in 2024, showing the high stakes of current, more complex regulatory discussions.
Energy Market Insights
Energy markets have also moved far beyond the terms described. Europe has become the primary destination for U.S. liquified natural gas (LNG) out of necessity, not due to tariffs, absorbing nearly two-thirds of U.S. exports in the first half of this year. We believe options on energy producers and shippers will react more to European gas storage levels and winter forecasts than to any trade policy statements.
The call to onshore pharmaceutical manufacturing has also been replaced by new concerns. Supply chain resilience and domestic drug pricing legislation are the key factors driving volatility in the healthcare sector now. We are positioned for market moves based on legislative headlines from Congress, not trade threats against European pharma giants.
Digital services taxes, once a major point of friction, have been largely superseded by the OECD’s global minimum tax framework. With this framework now in the implementation phase across most of Europe, the threat of individual country-specific tariffs has greatly diminished. Our focus for big tech derivatives has shifted to earnings impacts from this new global tax rate.
