Transatlantic Trade Monitor: Facts You Need Now | EU-U.S. trade deal: one joint state­ment, two legislative pro­posals and many open questions

By Bärbel Sachs, Tobias Zuber, Caroline Glöckle, Yuliya Zhmuro, and Theresa Bachmann, Noerr

A. Introduction

Almost a month after U.S. President Donald Trump and EU Commission President Ursula von der Leyen reached a high-level political agreement aimed at resetting the transatlantic trade relationship and preventing sweeping U.S. import tariffs from coming into force, the EU Commission and the U.S. published a Joint Statement on a United States – European Union framework on an agreement on reciprocal fair and balanced trade (“Joint Statement”) on 21 August 2025, which has now been followed by two EU legislative proposals (COM(2025)471 and COM(2025)472 – „Legislative Proposals“) mainly to implement concessions.

These publications provide insight into the ongoing negotiations, gradually clarifying the direction of discussions and what a potential EU–U.S. trade agreement might look like. The rapid submission of the Legislative Proposals was stipulated in the Joint Statement as a precondition for certain U.S. concessions to take effect. It remains uncertain whether – and in what form – these potentially controversial proposals will pass through the EU’s legislative process, which requires approval from both the European Parliament and the Council.

In the absence of a final binding agreement and the corresponding regulations, the prospects for a legally binding EU-U.S. trade agreement remain highly uncertain.

Nonetheless, based on these recent publications and the available information, the following represent the key developments and currently anticipated impacts:

B. Key implications of the Joint Statement and the Legislative Proposals for EU operators

The Joint Statement in conjunction with the Legislative Proposals outline the ground rules in providing a coordinated statement which gives EU businesses at least more certainty in planning and executing their exports to the U.S.

(i) Current U.S. commitments

The U.S. has confirmed a 15% tariff ceiling. In addition, it will apply either the U.S. Most Favoured Nation (“MFN”) tariff – which represents the rate the U.S. has committed to for all WTO members – or a 15% tariff (comprising the MFN rate plus a reciprocal tariff) on EU goods, whichever of the two calculation methods results in the higher rate.

There are, however, exempted product categories to which only the MFN tariff will apply. This includes all aircraft and aircraft parts, as well as generic pharmaceuticals including their ingredients and chemical precursors. The Joint Statement further indicates that more sectors and products could be added to the list of MFN-only products.

Goods currently subject to U.S. Section 232 tariff investigations, namely pharmaceuticals, semiconductors, and lumber shall, once such measures are imposed, be subject to a tariff which also does not exceed 15%.

Regarding automobiles and automobile parts, Section 232 tariffs will be applied to EU goods with an MFN tariff of 15% or higher; for goods with an MFN rate below 15%, a total tariff of 15% (including the MFN tariff and Section 232 tariffs) will be imposed.

Core sectors such as steel and aluminium remain excluded from any new relief measures, continuing to face punitive tariffs and restrictive quotas under the U.S. Section 232 regime. In this context, the Joint Statement uses cautious language, noting that the EU and the U.S. only “intend to consider the possibility of cooperation.” Moreover, no timeline or concrete mitigation mechanism has been proposed.

(ii) Current EU commitments

The EU pledges to eliminate tariffs on industrial goods and to grant limited tariff rate quotas (“TRQs”) for certain U.S. agricultural and fisheries exports. These include non-sensitive goods such as soy oil, tree nuts, and processed foods, but do not extend to politically sensitive sectors like beef or genetically modified products.

The Legislative Proposals are designed to implement the EU’s commitments under the Joint Statement.

Proposal 471 broadly translates the EU’s tariff and market access commitments into legislative action. It envisions the elimination of tariffs on most industrial products covered under tariff chapters 25–97 and establishes TRQs for a range of agricultural products, including pork, bison, dairy, cheese, nuts, soybean oil, animal feed, and various fish and seafood.

Proposal 472 focuses specifically on extending duty relief for lobsters – a key industry in the U.S. swing state of Maine and a priority for the U.S. administration. The existing duty relief from 2020, which is set to expire, would be extended, and the scope expanded to include processed lobster.

Both Legislative Proposals include provisions allowing the EU to suspend commitments to the U.S. if it fails to uphold its side of the agreement or causes significant distortions in the EU market. The broad scope of these suspension clauses indicates that the EU Commission anticipates potential obstacles to the implementation of the trade agreement even after it enters into force.

(iii) Other notable provisions

The U.S. has insisted on strict rules of origin (“RoO”) to prevent circumvention by third countries, particularly in sectors such as electronics, textiles, and automotive components. For the time being, the EU Legislative Proposals refer only to standard non-preferential RoO in Art. 59 of Regulation (EU) No 952/2013, pending agreement on preferential RoO with the U.S. For businesses operating complex global supply chains, the current uncertainty regarding origin thresholds may complicate compliance and disrupt planning.

The Joint Statement also includes certain remarks regarding the EU’s sustainable trade and supply chain legislation, spanning from the Corporate Sustainability Due Diligence Directive („CSDDD“), the Corporate Sustainability Reporting Directive („CSRD“) and the Deforestation Regulation (“EUDR”) to the Carbon Adjustment Mechanism Regulation (“CBAM”). Regarding the EUDR for instance, the EU “commits to work to address the concerns of U.S. producers and exporters” and regarding CBAM, the EU “commits to work to provide additional flexibilities in the CBAM implementation”. The cited passages address U.S. criticism regarding the EU’s sustainable trade legislation. Such clauses and bilateral agreements could further complicate the EU’s sustainable trade legislation and potentially undermine the EU’s efforts under its Green Deal policy objectives.

C. WTO compatibility and legal uncertainty

Any preferential treatment granted to the U.S. under the Framework Agreement – such as reduced tariffs or enhanced market access – could violate the WTO’s MFN principle unless identical concessions are extended to all WTO members. Similarly, the 15% tariff ceiling applied by the U.S. to EU goods requires WTO justification, particularly given its sector-specific and non-reciprocal nature, with notable exclusions for key industries such as steel and aluminium.

The EU and U.S. could potentially avoid legal challenges by formalising the agreement into a comprehensive free trade agreement (“FTA”) under Art. XXIV of GATT, or, in the interim, through an agreement establishing a free-trade area pursuant to Art. XXIV:5. Achieving this, however, would require the elimination of tariffs and other trade barriers across virtually all bilateral trade – a scope comparable to the long-abandoned TTIP negotiations. Current U.S. positions appear far from meeting these standards, emphasizing one-sided increases in U.S. tariffs while seeking additional market access in the EU.

Until such a treaty is concluded, the existing commitments risk being seen as MFN-inconsistent bilateral preferences, potentially triggering dispute settlement actions by other WTO members. While this may carry limited deterrent effect for a U.S. administration that openly questions WTO legitimacy, the EU remains committed to the multilateral trading system. As a participant in the Multi-Party Interim Appeal Arbitration Arrangement (“MPIA”), the EU could still face legal exposure under WTO rules, necessitating a careful balancing act to pursue a WTO-compliant trade agreement.

D. Outlook

Despite the progress reflected in the Joint Statement and the subsequent EU legislative proposals, substantial uncertainty remains regarding the future trajectory of EU–U.S. trade relations. The EU’s Legislative Proposals – COM(2025)471 and COM(2025)472 – may face resistance within Europe, as some measures are perceived as overly one-sided in favour of U.S. interests. Their eventual approval by both the European Parliament and the Council is therefore not guaranteed, leaving the implementation timeline and scope uncertain.

At the same time, U.S. positions remain fluid, marked by sudden shifts in strategy and the emergence of new demands – particularly regarding regulatory restrictions on U.S. tech companies, as once again illustrated by recent threats of additional U.S. tariffs in response to the EU’s antitrust fine against Google. Similarly, U.S. concerns about the EU’s evolving sustainable trade policies may overlap with the EU’s own initiatives and have not yet been addressed in the Legislative Proposals. The resulting gaps could trigger further trade tensions and necessitate additional rounds of negotiation.

In light of these dynamics, the EU’s ability to conduct negotiations in a manner fully consistent with WTO rules appears questionable. Without a clear, WTO-compliant framework, preferential treatment for U.S. goods and potential exemptions from tariffs may expose the EU to legal challenges from other WTO members.

For EU operators, the continuing uncertainty has concrete implications: financial and supply-chain planning remain challenging, and the risk of market disruptions persists. Companies will need to closely monitor developments to align business strategies, adapt to potential regulatory changes, and seize emerging opportunities. In this context, proactive engagement with the evolving transatlantic trade landscape will remain critical for mitigating risk and maximizing strategic advantage.

Compliments of Noerr – a Platinum Member of the EACCNY