Agreement on Reciprocal, Fair, and Balanced Trade

The Agreement on Reciprocal, Fair, and Balanced Trade is a proposed trade agreement between the European Union (EU) and the United States. A framework agreement was announced in a joint statement on 21 August 2025.^[1]^[2] The framework agreement provides for 15% tariffs on all European exports and 0% tariffs on certain US exports.^[3]

Tariffs

The US is imposing a 15% tariff on almost all EU goods, MFN tariffs for unavailable natural resources, aircraft, and generic pharmaceuticals, capping combined MFN + Section 232 tariffs at 15% for pharmaceuticals, semiconductors, and lumber, while leaving metals at 50% above quotas.^[2]^[4]

Non-tariff barriers

As part of the framework agreement, the EU committed to ensuring that the Corporate Sustainability Due Diligence Directive (CS3D) and the Corporate Sustainability Reporting Directive (CSRD) did not pose undue restrictions on trade, including reducing administrative burdens and proposing changes for a harmonised civil liability regime for due diligence failures, committed to provide additional flexibilities for US companies in its Carbon Border Adjustment Mechanism (CBAM), and committed to avoid any undue impact of the Regulation on Deforestation-free Products (EUDR).^[1]

With respect to cars the US and EU intend to accept and provide mutual recognition to each other's standards.^[1] They commit to boosting technical cooperation between standards bodies and expand conformity assessment recognition across industrial sectors.^[1] They also commit to streamlining sanitary certificate requirements for pork and dairy products.^[1]

Investment

European states committed to $750 billion in energy purchases and $600 billion in additional investments in the United States.^[5]

History

In August 2020, the EU and US agreed, for the first time in two decades, to reduce certain tariffs (on a most favoured nation basis, meaning the tariffs are dropped for all trading partners).^[6]^[7] But in 2025, US President Trump stated his intention to reduce the US trade deficit and achieve "energy dominance". He linked the two goals in April, calling on the European Union to buy $350 billion in American energy to eliminate its trade surplus with the United States. The EU faced a 20 percent tariff if it fails to reach a deal with Trump.^[8]

On 27 July 2025, the United States and the European Union reached a political agreement on a trade agreement, announced by Trump and President of the European Commission, Ursula von der Leyen, at Turnberry, Scotland.^[3]^[9] After the agreement, French Prime Minister Francois Bayrou called it a "submission",^[10] while German Chancellor Friedrich Merz said the deal would significantly damage his country's finances.^[11] On 28 August the Commission put forward regulations for the Parliament and Council to enact the EU's tariff reductions, a necessary step for the US to retroactively lower its tariffs on EU cars to 15% from 1 August.^[12]