U.S. President Donald Trump and European Commission President Ursula von der Leyen officially announced a major trade agreement between the United States and the European Union. Under the deal, a 15% import tariff will be imposed on the majority of European goods entering the U.S., including automobiles—replacing the previously threatened 30% tariff.

As reported by CNBC on Monday, July 28, 2025, the EU has also agreed to purchase $750 billion worth of energy from the U.S., and to allocate an additional $600 billion in new investments within the United States. In addition to energy, the 27-nation bloc will also acquire military equipment from the U.S. valued in the hundreds of billions of dollars, although the precise amount was not disclosed.

“This is an incredibly strong agreement, a very large one—it is the biggest of all deals,” said Trump during a joint press conference with von der Leyen.

Von der Leyen clarified that certain goods—such as aircraft and their components, chemicals, and pharmaceutical products—will be exempted from the new tariffs. She also emphasized that the 15% tariff will not be layered on top of existing tariffs.

This agreement marks a strategic breakthrough following extended uncertainty surrounding trade negotiations between the two major economic powers. Prior to the announcement, Trump stated the likelihood of a deal being reached was only 50-50, while the EU had already prepared for a no-deal scenario.

In anticipation, the EU had approved a set of retaliatory tariffs targeting various U.S. products and even considered deploying its so-called Anti-Coercion Instrument, often described as the bloc’s ultimate trade defense tool.

Nevertheless, the conclusion of this agreement has successfully averted the threat of a trade war. Irish Prime Minister Micheál Martin welcomed the deal, noting that it brings greater clarity to U.S.-EU trade relations. However, he acknowledged that the 15% tariff would raise costs and present challenges to trade.

“Nonetheless, the agreement signals the beginning of a new era of stability,” read an official statement from Ireland’s Department of the Taoiseach.

German Chancellor Friedrich Merz also expressed support for the deal, particularly because of its implications for Germany’s automotive industry. He pointed out that the 27.5% tariff on the sector has now been cut nearly in half to 15%.

“With this successful tariff negotiation between the EU and the U.S., a potential trade conflict—which could have severely impacted Germany’s export-driven economy—has been avoided,” he stated.

According to the European Council, trade between the U.S. and EU amounted to approximately €1.68 trillion or US$1.97 trillion in 2024, factoring in both goods and services.

Although the agreement does not directly affect Indonesia, the trade policy direction set by these two major global powers could influence global trade flows and shape long-term developments in energy markets and the automotive industry.