Trump’s tariffs: A deal is a deal?

Our analysis shows that the average effective bilateral US tariff rate on imports from the European Union (EU) was only 7.8 per cent from Liberation Day in April 2025 to February 2026. This is significantly lower than the announced tariff rates at the time. The effective tariff rates were somewhat higher for some EU Member States, where the manufacturing sector accounts for a larger share of the economy, such as Germany (10.6 per cent) or Italy (9.6 per cent). However, during the same time period China faced a much higher effective US tariff rate of almost 37 per cent, while for Japan it was 14 per cent and for the UK 6.3 per cent. Imports from Canada and Mexico, in contrast, were effectively only tariffed at 3.8 per cent.

At first sight the differences in average effective tariff rates seem to have had limited impact on trade flows so far as the share of US imports coming from the EU and other industrialized countries have changed only modestly. In contrast, China’s share in US imports fell by almost one half between the 2024 and 2026, indicating significant trade diversion to the detriment of China.

The focus is a deeper analysis of the effects of the US–EU deal, the so-called Turnberry Deal, effective from September 2025 to February 2026. The following results refer to total US imports from the EU:  

• From September 2025 to February 2026, when the deal was effective, the US on average levied an effective tariff of 8.2 per cent on imports from the EU, which is much lower than the announced rate of 15 per cent. Moreover, while this was a slight decrease to the peak just before the deal was implemented in August (9.4 per cent) the average value was somewhat skewed by a one-off drop in September 2025. 
• There was an immediate decline in the effective bilateral tariff rate for the EU after the enforcement of the deal in September 2025 to 7 per cent. But that was driven by the composition of imports, i.e. more imports of tariff-exempted pharmaceuticals mostly from Ireland, rather than an actual decline in the tariff rate on product groups, that are important for the export to the US. By as early as October 2025, the effective tariff rate returned to a level broadly in line with that in the period before the US–EU deal.
• Thus, while the US–EU deal does seem to have helped to stop the increasing trend in the effective tariff rate on imports from the EU, it did not lead to a significant decline in the rate. 
• At the level of individual EU Member States, the results are somewhat more nuanced. Germany, which had the highest effective tariff before the deal by up to 13 per cent, converged to the EU average after the deal came into force. The wedge between Germany’s and the EU’s overall effective tariff rate narrows. Therefore, the US–EU deal does seem to have improved the relative situation for Germany. 
• In comparison to its main competitors on the US market, the EU’s position in terms of tariffs after the deal was in the midrange: more favourable than Japan or South Korea, a bit less favourable than the UK, and less favourable than for Canada and Mexico. There was therefore some relative gain for the EU due to the Turnberry Deal.

The sectoral analysis shows that the US–EU deal did not lower the effective tariff rates in many important EU export sectors:

• German and Italian exports of machinery and mechanical appliances, for instance, were tariffed by the US at an effective rate of around 14.5 per cent from September 2025 to February 2026. This is an increase by between 1 and 2 percentage points in comparison to August 2025. Similarly, for electrical machinery the average effective tariff rate for the EU continued to increase after the deal was implemented to reach 11.5 per cent from September 2025 to February 2026. One explanation for this effect is that the list of goods that are subject to the 50 per cent steel and aluminum tariff based on Section 232 was expanded in August to include many machines that count as derivative steel products. 
• For both sectors the EU’s effective tariff rates were much higher than for Southeast Asian competitors like Taiwan, Vietnam, or South Korea. This result was mainly driven by the different composition of exports to the US. For instance, a high and growing share of Taiwanese exports are automatic data processing machines or various kinds of semiconductors. The US import share of these goods from the EU is rather low. These goods were tariffed at a very low rate or were even duty free. At the same time, they are in high demand due to the AI-boom. This highlights the EU’s lack of specialization in product categories that are driving current economic growth and that are therefore hardly tariffed by the US so far. 
• A notable exception is passenger vehicles. Here the effective tariff rate for the EU on average as well as for individual EU Member States dropped from around 27 per cent to around 15 per cent. But even for passenger vehicles the EU was not much better off than some of its main competitors like Japan (15.4 per cent) after the deal. 

Since the US Supreme Court ruling on emergency tariffs in February 2026 the US Administration replaced the reciprocal tariffs globally with an additional temporary 10 per cent tariff using a different legal basis. China and India but also South Korea and Vietnam were the main beneficiaries of this new temporary tariff structure, because their effective tariff rates were reduced considerably. For instance, China’s effective tariff rate was reduced by almost 9 per centage points from February 2026 to 23.1 per cent in March 2026. For India the reduction is even greater at 12.3 per centage points to an effective tariff rate of just 8.3 per cent in March 2026. The EU’s effective tariff rate also decreased slightly by one per centage point to 8.1 per cent in March 2026. However, as the reductions for its main competitors in Southeast Asia are mostly bigger, the relative advantage the EU previously enjoyed has diminished slightly.

Going forward, assuming the US Administration sticks to the Turnberry Deal, its economic merit for the EU will depend mainly on the level of tariffs that the US is likely to levy after the various ongoing investigations, as well as the reactions of the other US trading partners. If the US broadly replicates the pre-Supreme Court tariff structure, the deal can be viewed positively. However, if the US does not give the EU a relatively preferential treatment, the EU would need to reconsider the balance of the US–EU deal. Because the EU’s own tariff concessions towards the US were based on this premise.

Still, the main benefit to the EU of the Turnberry Deal might be at least a certain degree of predictability with regards to US trade relations, as it is highly unlikely that the current US Administration will give up on tariffs. A fact that is corroborated by the on-going investigations under Section 232 and Section 301. In that sense a flexibly formulated suspension clause which would allow the tariff preferences with the US to be suspended, for instance if the US were to impose additional tariffs exceeding the agreed 15 per cent ceiling, would be useful to create diplomatic leverage. Moreover, our sectoral analysis has shown that machinery and electrical machinery exports from the EU to the US are exposed to above-average tariffs mainly due to the additional steel and aluminium tariffs on derivative products. This clearly goes against the spirit of the deal and needs to be addressed urgently. Under these considerations, the Turnberry Deal is indeed a bitter-sweet pill for the EU to swallow, but it is better than constant disruption.