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US President Donald Trump has backed down from setting high tariffs on pharmaceuticals and semiconductors imported from the European Union. Last month, Trump said pharmaceuticals and semiconductors were not covered by the US and EU's handshake trade deal - meaning those sectors could have faced tariffs rates of 250% and 100% respectively.
Trump backs down from 250% EU pharma tariff in deal
US President Donald Trump has backed down from setting high tariffs on pharmaceuticals and semiconductors imported from the European Union.
Last month, Trump said pharmaceuticals and semiconductors were not covered by the US and EU's handshake trade deal - meaning those sectors could have faced tariffs rates of 250% and 100% respectively.
But according to new details released about the US-EU agreement on Thursday, EU pharma and semiconductor tariffs will be limited to 15% in line with most other sectors in the trade deal.
However, the EU will first have to pass legislation reducing US export tariffs to zero in order to get the 27.5% tariffs on car exports reduced to 15%.
In a joint statement on the agreement, the US and EU said this was a "first step in a process" that could be expanded as the relationship develops.
The trade deal was first announced at a meeting between Trump and European Commission President Ursula von der Leyen in Scotland last month.
They agreed to reduce tariffs on most EU exports to 15%, half the rate originally threatened by Trump but higher than the 10% tariff secured by the UK.
At the time, von der Leyen described it as a "framework" agreement with details to be worked out over the following weeks.
But later threats of higher tariffs on pharmaceutical and semiconductor exports to the US heightened fears that those products would be excluded from the deal.
In July, Trump had threatened to lift pharmaecutical tariffs to 200%, but speaking on CNBC on 5 August, Trump said they could eventually go as high as 250%.
"We want pharmaceuticals made in our country," he told CNBC.
EU member state Ireland is a major pharmaceutical exporter to the US, as are other European nations: Ozempic manufacturer Novo Nordisk is also Europe-based, headquartered in Denmark.
On Thursday, Ireland's Deputy Prime Minister and Foreign Minister Simon Harris welcomed the assurance that the 15% rate will include pharmaceuticals and semiconductors.
"This provides an important shield to Irish exporters that could have been subject to much larger tariffs," he said.
According to the joint agreement, the US will apply the new 15% tariff rate on most European goods, including European semiconductor and lumber exports, from 1 September.
In return, the EU will reduce to zero tariffs on "all US industrial goods", including agricultural products such as fresh fruit and vegetables, pork, bison meat, and tree nuts.
It is only once Europe removes tariffs on US exports - a move that requires legislation - that the White House will reduce the 27.5% tariff on European motor vehicle exports to 15%, the agreement said.
EU Trade Commissioner Maros Sefcovic told a news conference the deal sets out that the 15% tariff on cars would be retroactively applied from the first of the month in which the legislative process begins.
Sefcovic said it was the EU's "firm intention" to get that process started this month, and he had received reassurance from the US that the lower tariff would then apply from 1 August.
Director general of the European Automobile Manufacturers' Association Sigrid de Vries told BBC's Today programme it was important to have a deal, but the car industry was "not out of the woods" yet as manufacturers have been paying "millions of euros in tariffs every day" since April.
"The deal says we'll go down from 27.5% to 15% but we're coming from a rate of 2.5% so the impact will continue to be large," she said, adding that would affect prices for customers in the US and beyond.
EU Commission President Ursula von der Leyen said on X the deal offered predictability for the bloc's businesses and consumers, as well as "stability in the largest trading partnership in the world".
US Secretary of Commerce Howard Lutnick said on X the deal "creates historic access to the vast European markets" for American producers.
The deal comes after months of tariff threats and intense negotiations between the US and the EU, after Trump first announced in April that he would hit all European exports with a 30% tariff.
However, there was disappointment on both sides of the Atlantic that wine and spirits had not managed to be exempted from tariffs.
The French wine exporters federation, FEVS, said it would "create major difficulties for the wines and spirits sector".
Mr Sefcovic said that with wine and spirits, "unfortunately, here we didn't succeed", although he added, "these doors are not closed forever."
In the US, the Distilled Spirits Council also said it was disappointed by the agreement.
It said that without "a permanent return to zero-for-zero tariffs on spirits", US distillers would not have the certainty to plan for future growth, while higher tariffs on EU spirits would "further compound the challenges facing restaurants and bars" in the US.
Source: BBC
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