On February 23, the European Parliament froze the approval process for the trade agreement reached between the EU and the US last summer, due to concerns that US President Trump’s recently announced new tariffs violate the terms of that agreement.
Last year, Trump invoked the International Emergency Economic Powers Actto impose tariffs on countries worldwide. After this action was ruled unlawful by a majority of the US Supreme Court on February 20, Trump then invoked Section 122 of the Trade Act of 1974—a provision largely unused for decades—to announce a flat 15% global tariff.
According to assessments by multiple trade research institutions, under Trump’s new flat global tariff, some economies that had previously negotiated higher tariffs with the US stand to benefit, while others that had secured “preferential agreements” with the US suddenly find themselves as “losers,” including the European Union.
The EU is naturally unwilling to accept this. Last Sunday (February 22), the European Commission issued a strongly worded statement. It said: “In light of the recent [US] Supreme Court ruling on the International Emergency Economic Powers Act, the European Commission requests full and clear clarification from the United States regarding the steps it intends to take.”
“The current situation is detrimental to achieving ‘fair, balanced, and mutually beneficial’ transatlantic trade and investment,” the European Commission warned its trade partner across the Atlantic. “An agreement is an agreement. As the United States’ largest trade partner, the EU expects the US to honor its commitments.”
01 How Did the EU Become a “Loser”?
Following Trump’s announcement of the flat 15% global tariff, the Switzerland-based independent trade monitoring organization Global Trade Alert assessed its impact. The assessment found that countries Trump frequently criticizes, such as Brazil, China, and India, stand to benefit the most. Conversely, the hardest-hit so-called “losers” are US allies like the United Kingdom, the European Union, and Japan.
The EU became a loser because, in the world of trade, there is no absolute fairness, only relative thresholds. One can think of the EU as a gold card member of the US. Last summer, to ease friction, the EU and Trump reached the Turnberry Agreement at the Trump Turnberry resort in Scotland. To obtain this “gold card,” the EU paid a significant price, such as eliminating tariffs on US lobster and industrial machinery entering Europe in exchange for the US maintaining lower tariff rates on European products.
However, Trump’s new flat 15% global tariff is akin to a store suddenly abolishing all membership cards and charging everyone a flat 15% entry fee. This has completely different implications for different parties: for competitors like Brazil, China, and India, whose previous “entry fees” might have been as high as 25% or even 50%, a reduction to 15% represents a significant price cut. But for the EU, a gold card member, its previous preferential treatment is instantly voided.
According to Global Trade Alert’s assessment, although the EU has approximately 1,100 specific product categories eligible for exemption, because tariffs on the vast majority of industrial goods are forcibly raised, the overall effective tariff rate for EU exports to the US is projected to increase by 0.8 percentage points to a level of 12.5%.
This 0.8% may seem small, but in the razor-thin profit margins of international trade, it is enough to erase the price advantage for many European companies. The EU’s loss lies not only in the increased “entry fee” but also in the fact that it had already opened its market wider to US goods (e.g., by eliminating tariffs on US lobster and industrial products) only to face what it perceives as betrayal by an ally.
Regarding the aforementioned “approximately 1,100 specific product categories eligible for exemption,” the reality is as follows:
These 1,100 exempted product categories are by no means a favor from the US to its allies but are intended to avoid “self-harm.” The exemption list (Annex II) under the new Section 122 action includes the following typical duty-free or low-duty products:
- Pharmaceutical Products and Raw Materials: Includes generic drugs and their key chemical precursors. The US is acutely aware of its high domestic drug prices. Imposing a 15% tariff on these life-saving medicines from Europe would ultimately be paid by angry US voters facing even higher prices.
- Civil Aircraft and Parts: Such as Airbus fuselage components. Given the deeply intertwined global aviation supply chain, where many of Boeing’s key components also rely on European suppliers, severing this link would risk paralyzing the US aerospace industry.
- Scarce Natural Resources: Examples include imported natural softwood timber from Europe, specific critical minerals, and fertilizers. These resources either cannot be produced domestically in the US, or domestic production is insufficient to meet its agricultural and industrial demands.
However, apart from these “strategic necessities” that the US cannot do without, the EU’s core profit-generating sectors—such as automobile manufacturing, precision machinery, high-end chemicals, and luxury goods—are almost entirely caught in the US tariff net. This means that while the EU maintains “zero-tariff” or low rates on pharmaceuticals and aircraft parts, in the broader sphere of industrial trade, it has effectively fallen from its previously agreed preferential status to the position of facing a 15% tariff wall.
This “precise targeting of damage” precisely illustrates the logic of the Trump administration: retain only what I depend on you for, and tax the rest.
02 Reactions from EU Businesses
Following Trump’s announcement on Saturday (February 21) raising the flat global tariff to 15%, European industry was plunged into significant uncertainty. Although Sunday was not a business day, the mood pervading industrial circles in Berlin and Paris was somber.
The German Association of the Automotive Industry (VDA) has previously repeatedly warned publicly that any unilateral tariff increases would place a “significant burden and challenge” on the global automotive supply chain, emphasizing that protectionism “only creates losers.”
Facing the new 15% rate, carmakers like Volkswagen, BMW, and Mercedes-Benz not only risk surging costs but also worry about parts supplies for their US-based factories. Taking BMW as an example, its US plants heavily rely on importing core components like engines from Germany. A 15% tariff would directly increase the cost of manufacturing its cars in the US.
On Monday (February 23), the VDA issued an urgent statement calling for the EU to swiftly engage in “constructive dialogue” with Washington. The VDA stressed that, in the face of the 15% flat global tariff, the EU must act immediately to prevent further escalation and provide “urgent clarity” for businesses mired in uncertainty.
Beyond the automotive giants, smaller “hidden champions” indispensable in specific niches are also deeply concerned. German precision machinery manufacturers and French high-end chemical companies have stated that a 15% surcharge would directly erase their already slim profit margins. Clearly, these companies cannot simply relocate expensive production lines to the US in the short term.
Simultaneously, France’s luxury goods and spirits industry is feeling a distinct chill. Members of the French Federation of Wine and Spirits Exporters (FEVS) are urgently assessing the situation. Since the US tariff exemption for EU wine in last year’s EU-US trade agreement was seen as a symbol of the trade truce, the current across-the-board taxation is widely viewed as a breach of that understanding.
As the German Chemical Industry Association (VCI) commented on the situation on February 22: this is not the start of a period of stability, but the arrival of a new wave of uncertainty. Any notion that the tariff conflict is over is mistaken.
03 EU-US Trade Can No Longer Proceed ‘Business as Usual’
There are already voices within the EU urging the European Parliament to postpone the vote on implementing the EU-side legislation for the transatlantic trade agreement, and one such voice carries significant weight.
On Sunday (February 22), Bernd Lange, Chair of the European Parliament’s Committee on International Trade (INTA), stated that Trump’s imposition of a 15% global tariff following the Supreme Court’s ruling against his previous tariffs constituted a “blatant violation of the agreement we have reached.”
“Therefore, I will recommend temporarily suspending the approval process for this agreement,” Lange said. He did not rule out the possibility of “renegotiating the agreement.”
Lange is one of the most senior and influential figures in European trade policy. A member of Germany’s Social Democratic Party (SPD), he served as a Member of the European Parliament (MEP) from 1994 to 2004 and was re-elected as an MEP in July 2009. Since 2014, he has chaired the INTA and served as rapporteur for the Transatlantic Trade and Investment Partnership (TTIP).
As anticipated, on Monday (February 23), the European Parliament decided to postpone the vote on whether to approve the Turnberry Agreement.
Following this decision, German Green Party MEP Anna Cavazzini stated: “The decision to postpone the vote is correct. Given the enormous uncertainty that currently exists, it would be unjustifiable to vote now.”
Cavazzini’s concerns are justified, as Trump reinforced his tariff threats in a series of social media posts on Monday: “Any country trying to ‘game’ that ridiculous Supreme Court decision, especially those that have been taking advantage of the United States for years, even decades, will face tariffs that are much higher, and far worse, than what they just agreed to!”
Indeed, Trump has long accused the EU of “taking advantage of the United States.”
The EU, for its part, believes Trump’s new tariffs directly violate the Turnberry Agreement and a subsequent joint statement cementing it. The EU contends that the Turnberry Agreement stipulates that “all-inclusive” tariffs on most goods should not exceed 15%, whereas Trump’s 15% global tariff is applied on top of the tariffs established by that agreement.
Confirming the postponement of the vote, Lange stated: “Business as usual in EU-US trade is no longer an option.”