Stocks are rising around the world after President Donald Trump announced that the U.S. has reached a trade deal with the European Union (EU).
Trump said that the trade deal, which was reached days before an Aug. 1 deadline, imposes a 15% tariff on most European goods to the U.S., including motor vehicles.
Some products, including aircraft parts and pharmaceuticals, will not be subject to tariffs. Additionally, the new 15% tariff rate will not be added to any tariffs that are already in effect.
The 15% tariff rate is lower than the 30% rate Trump had threatened against the United States’ largest trading partner, but higher than the 10% baseline tariffs that Europe was negotiating for.
Trump said that the 27-country EU also agreed to purchase $750 billion worth of U.S. energy and invest an additional $600 billion U.S. into the U.S. above current levels.
The president added that Europe would be “purchasing hundreds of billions of dollars worth of military equipment” from America but did not provide any details.
While questions remain about the specific details and timeline of the EU deal and investments, the agreement was enough to send stocks higher on July 28.
All three U.S. indices – the blue-chip Dow Jones Industrial Average, Nasdaq Composite, and benchmark S&P 500 – are up in premarket trading on the news.
European leaders were quick to applaud the agreement amid relief that the continent had avoided a trade war with America, but some voiced caution about the terms of the deal.
Ireland’s Prime Minister Micheál Martin said the agreement means that there will now be higher tariffs and this will have an impact on trade between the EU and the U.S., making it more expensive and more challenging.
Netherlands Prime Minister Dick Schoof said that “no tariffs would have been better,” but praised the European Commission for securing the best agreement possible.
The U.S.-EU trade relationship was valued at 1.68 trillion euros ($1.97 trillion U.S.) in 2024 when taking into account both services and goods, according to European Council data.
The EU had an overall trade surplus of around 50 billion euros with the U.S. last year.
