US President Donald Trump speaks throughout a multilateral assembly with European leaders within the East Room of the White House in Washington, DC, US, on Monday, Aug. 18, 2025.
Aaron Schwartz/CNP/Bloomberg through Getty Images
The U.S. and European Union granted businesses some desperately wanted readability as they shared contemporary particulars on their commerce settlement on Thursday, however questions remain about whether or not the deal can actually be trusted.
Thursday’s update broadly echoed the framework introduced by the U.S. and EU in July, which known as for 15% tariffs in addition to pledges for Brussels to amp up spending and funding within the U.S. New particulars embrace a cap of 15% tariffs on prescription drugs, lumber and semiconductors. Autos will face the identical fee, however solely after the EU makes laws adjustments to cut back its industrial duties.
However, EU Trade Commissioner Maros Sefcovic on Thursday prompt the framework was just the start, leaving the door open for future adjustments to the deal.
Missing particulars
Despite offering some much-needed readability, there are nonetheless varied smaller, but essential, facets lacking from the present framework.
A muted market response from prescription drugs on Thursday highlighted investor skepticism and there was no point out of the wine and spirits sector within the deal.
“A lot of the details remain to be worked out,” Penny Naas, who leads on the German Marshall Fund’s allied strategic competitiveness work, informed CNBC, pointing to for instance so-called ‘guidelines of origin.’
“These rules determine where value is most added to a product that contains multiple parts from multiple countries, and when it can be labeled ‘European’ or ‘American,'” she defined. Naas famous that these guidelines come into play on the subject of for instance transshipments — a course of wherein items would possibly originate from one nation, however are then despatched to a different for ultimate cargo to the U.S.
Carsten Brzeski, ING’s world head of macro, in the meantime identified uncertainties “stemming from formalities and procedures at customs,” which he says are significantly impacting small and medium-sized enterprises.
Some corporations are already dealing with points on this regard, with corporations having to “recruit tariff specialists in order to clarify the new customs requirements,” he mentioned.
Trump’s flip-flopping
Another concern is U.S. President Donald Trump’s historical past of fact-paced changes of heart and policy shifts, Antonio Fatás, professor of economics on the European Institute of Business Administration (INSEAD), informed CNBC.
The president for instance doubled steep metal tariffs in a single day, and later quietly expanded their scope.
Elsewhere, Switzerland was sufferer to the president’s erratic determination making, with the nation reportedly having been extraordinarily near a deal, which was then nonetheless pulled by Trump as he slapped 39% duties on Swiss exports to the U.S. nearly in a single day.
“The real issue for business is how to define a long-term strategy with a country that is no longer a reliable partner,” Fatás mentioned. “What used to be the most reliable partner for Europe has now become one of the most volatile, if not the worst, when it comes to economic policies,” he added.
The German Marshall Fund’s Naas additionally flagged this as a danger for businesses.
“This deal does not include any enforcement provisions, nor will it be codified by Congress, which means it could change at the direction of the U.S. President,” she mentioned.
Naas pointed to Section 232 tariffs for example, with Trump having modified tariff charges on some merchandise “at a moment’s notice, and the Administration has expanded the scope to cover other products without warning.”
To belief or to not belief?
Businesses are due to this fact left with a key query: to belief or to not belief the deal.
While Thursday’s assertion provides some readability, the deal “remains fragile and could quickly dissolve,” ING’s Brzeski mentioned in a word after the announcement. “The agreement contains numerous elements that could spark future tensions and escalation. Implementation, monitoring and enforcement of many of the intentions is not always clear,” he added.
Naas echoed the requires warning. While the U.S.-EU settlement seems “more likely to be stable” than a few of Trump’s different tariff insurance policies like sectoral duties, it “will require the EU to remain on “good habits” or else risk a sudden change,” she mentioned.
In addition to the uncertainties concerning the stability of the U.S.-EU deal, businesses are additionally contending with questions concerning varied world shifts available in the market, based on Gregor Hirt, multi-asset chief funding officer at Allianz Global Investors.
He informed CNBC businesses are dealing with a number of key questions: “Is the US heading toward a recession or even worse, stagflation, and how resilient will companies’ margin be in this kind of environment, especially considering the high market valuation in the US? Moreover, what further tools do policymakers have to counter a potential downturn, for example in terms of deregulation or specific sector ‘incentives’?”
“And, finally, how will the shift away from global trade liberalisation and institutionalize framework affect long-term investment and supply chain strategies?” Hirt mentioned, including that these tariff-related points are additionally key for corporations capacity to plan within the present atmosphere.