'American tariffs ultimately get paid by Americans': US, EU agree to trade deal

The United States and the European Union have agreed to a framework for a major trade deal that will alter tariffs and boost energy purchases, following a meeting between President Donald Trump and European Commission President Ursula von der Leyen.Trump described the negotiation as “very interesting” and expressed optimism about the deal’s benefits, calling it “a good deal for everybody” and “a giant deal with lots of countries.”Von der Leyen said the deal “will bring stability, it will bring predictability, that’s very important for our businesses on both sides of the Atlantic.”While the specifics are still being worked out, the agreement includes U.S. companies paying zero tariffs to export goods into Europe, while many European products will face 15% tariffs. Von der Leyen clarified that such a rate wouldn’t apply to everything, saying both sides agreed on “zero for zero tariffs on a number of strategic products,” like all aircraft and component parts, certain chemicals, certain generic drugs, semiconductor equipment, some agricultural products, natural resources, and critical raw materials. It is unclear if alcohol will be included in that list. “We will keep working to add more products to this list,” she said, while also stressing that the “framework means the figures we have just explained to the public, but, of course, details have to be sorted out. And that will happen over the next weeks.”Economists say the deal could push prices up on pharmaceuticals, cars, computer chips, wine, and food. Ernie Tedeschi from the Yale Budget Lab said, “American tariffs ultimately get paid by Americans. Foreign producers don’t swallow much, if any, of the cost of tariffs. It’s still up in the air how much is going to be absorbed or swallowed by American businesses or importers versus passed on to American consumers.”The White House is pushing back, with White House spokesperson Kush Desai saying in a statement: “Two things can be accomplished at once: delivering economic relief for the American people and levelling the playing field for American businesses and workers. The Administration has consistently maintained that the cost of tariffs will be borne by foreign exporters who rely on access to the American economy, the world’s biggest and best consumer market. A new CEA analysis proves just that: prices of imported goods have actually fallen this year despite President Trump’s historic tariffs. After ending Joe Biden’s inflation crisis, President Trump has used tariffs to secure historic access for American businesses to countries with a combined $30 trillion economy and one billion people – with more deals forthcoming, the best is yet to come,”Kathy Dolby, who owns several shoe stores in Washington, D.C., said, “Starting in about June, we started to see our manufacturers raise our prices on shoes.” She said, “Typically, we would see a small price jump. But $10 (for a new model) is quite a bit.” When asked if she thought the price increase was directly related to tariffs, Dolby said, “I know it’s directly related to tariffs.”As part of the deal, EU nations will buy $750 billion worth of American energy to reduce reliance on Russia, and European companies agreed to invest an additional $600 billion in the U.S. The White House announced that this deal, along with others, will take effect Aug. 1.The EU Commission must now present the deal to member states and EU lawmakers, who will ultimately decide whether or not to approve it.Treasury Secretary Scott Bessent is meeting with Chinese trade officials in Sweden, with expectations to extend current tariffs past an Aug. 12 deadline. The U.S. is currently taxing Chinese imports at 30%, and Trump has hinted at a possible summit with Chinese President Xi Jinping.