The European Parliament approves the EU-US trade agreement ahead of the "Trump deadline," temporarily easing tariff risks.

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The European Parliament has passed the long-awaited US-EU trade agreement, giving the EU temporary breathing space, but the deep contradictions in bilateral relations are far from resolved.

On Tuesday, the European Parliament formally approved the US-EU trade agreement with 440 votes in favor, 151 against, and 50 abstentions. The EU agreed to abolish tariffs on US industrial goods and some agricultural products, in exchange for the US setting an upper limit of 15% on tariffs for EU products.

According to procedure, EU member states are expected to complete final approval on June 26, closing the nearly year-long winding negotiations.

This approval has helped the EU secure a key bargaining chip to ease transatlantic trade tensions. Trump had previously issued a clear warning that if the EU failed to complete approval by July 4, higher tariffs would be imposed on EU automobiles. The parliament vote before this deadline allows the EU to temporarily avoid this threat.

For the market, the agreement's implementation in the short term helps boost sentiment in the European auto sector and reduces export uncertainty. The Stoxx Europe 600 Automobiles & Parts Index closed up 2.6%.

However, differences on steel and aluminum tariffs and disputes over technology regulation remain unresolved, and the solid foundation for bilateral relations still needs to be strengthened. Analysts warn that the agreement itself contains a clause expiring at the end of 2029 and a clause allowing the EU to unilaterally suspend implementation, combined with Trump’s ever-changing tariff positions, the protective effect provided by the agreement is clearly limited.

Framework of the Agreement: EU Concessions in Exchange for Tariff Caps

According to the agreement, the EU agrees to abolish tariffs on US industrial goods and some agricultural products, in exchange for the US setting an upper limit of 15% on tariffs for EU products.

The agreement was originally negotiated last summer between Trump and EU Commission President Ursula von der Leyen. The EU proactively accepted this unequal arrangement to avoid an escalation of the trade war, maintain Trump’s involvement in the Ukraine issue, and prevent him from withdrawing security commitments to Europe.

Before final approval in the European Parliament, the agreement underwent two suspensions: once due to Trump’s threat to annex Greenland, and once due to a US court ruling that invalidated the president’s global tariff order.

Members eventually added a clause to the agreement expiring at the end of 2029, and a clause allowing the EU to suspend implementation if Washington violates the agreement, and these revisions went through further negotiations with EU member states.

Bernd Lange, chairman of the European Parliament’s Trade Committee, stated, "Under considerable pressure, we secured important safeguards to protect European interests."

Technology Regulation and Steel/Aluminum Tariffs Remain Points of Friction

Following approval of the agreement, technology regulation issues are expected to become the primary source of friction. US officials have long asserted that the EU agreed within the framework to adjust technology regulations deemed unfairly targeted at US companies; but EU officials insist that digital rules were not part of the negotiations and treat all companies equally.

Trump recently reiterated his tough stance on this issue. According to reports, he warned French President Macron in an interview with the New York Post that if France targets US tech companies, he will impose a 100% tariff on all French champagne and wine.

European Parliament member Anna Cavazzini, representing the Green Party in the negotiations, stated:

"The threats will not stop, because Trump is utterly capricious and seems increasingly anxious. It is important that the commission does not concede even one centimeter beyond the content of the agreement."

Steel and aluminum tariffs similarly remain points of sustained friction. The EU is dissatisfied with US tariffs on hundreds of steel and aluminum-containing products exceeding the 15% cap in the agreement, and included a clause that, if tariffs on these products exceed 15% after 2026, the EU can suspend some tariff concessions.

The agreement may have been passed, but EU officials and members have clearly warned that the coming months remain full of uncertainty, and bilateral relations are far from entering a stable track.

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