US tariffs on European pharmaceuticals and semiconductors will not exceed 15% under a new agreement with the European Union (EU) while the EU intends to eliminate tariffs on all US industrial goods.

The softening of the US position, which three weeks ago proposed 100% tariffs, is being welcomed by Europe. It builds on the previous agreement signed on 27 July in which the EU will buy $750bn of LNG and energy products until 2028.

Europe has also pledged to invest an extra $600bn across strategic US sectors in the same timeframe including buying $40bn-worth of AI chips.

Taking note of US concerns related to treatment of US small and medium-sized businesses under the Carbon Border Adjustment Mechanism (CBAM), the European Commission said it will commit to work to provide “additional flexibilities” in the CBAM implementation.

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