After months of negotiations, the US and the European Union (EU) have finally reached a trade agreement. Investor concerns were heightening that the two economic heavyweights might not reach an agreement, which would weigh down global economic activity. European Commission President Ursula von der Leyen visited US President Donald Trump in Scotland over the weekend, which ended with both sides reaching an agreement. The tariff deadline is August 1. President Trump said there would be no more pauses or extensions. Several countries, including Canada, are working on securing a trade deal.

• The US and EU have agreed on a trade deal, avoiding higher tariffs on August 1 and potential retaliatory tariffs from the EU on the US. The deal will include a 15% tariff on most European goods being imported into the US. The EU will remove tariffs on some US products.
• The deal also included the EU promising to purchase US$750 billion of US energy products. The EU Commissioner said this will help the EU shift away from Russian energy supplies. The EU also agreed to invest US$600 billion in the US.
• The deal helped alleviate some concerns that escalating trade tensions between the US and Europe could hinder global economic activity.
• Not everyone in the European business community is satisfied with the deal. Industry leaders in Germany, for instance, say the deal could expose the automotive industry to more harm. Additionally, some say the deal might make European companies less competitive in the global market.

Despite some objections, von der Leyen says the EU must remember that it was facing up to 50% tariffs, and the deal provides some clarity for businesses and consumers. The August 1 deadline for higher tariffs is quickly approaching. For now, Canada is without a trade deal. Last Friday, President Trump said he isn’t currently focused on Canada. However, both sides continue to negotiate.

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