Europe's reaction to the US trade agreement is a mix of relief, concern and reassurance

European governments and businesses reacted on Monday with relief and concern to the framework deal reached with U.S. president Donald Trump. They acknowledged that it was an unbalanced agreement, but one which avoided a more serious trade war.

The U.S. will impose an import tariff of 15% on the majority of EU goods, which is half the rate threatened, but more than the Europeans had hoped.

The deal was not entirely clear at the time.

As we wait for the full details of the EU-U.S. trade agreement, one thing is clear: this is a moment of relief but not celebration," wrote Belgian Prime Minister Bart De Wever on X. One thing is certain: This is not a time to celebrate, but rather a moment for relief," wrote Belgian Prime Minster Bart De Wever on X. "Tariffs are going to increase in many areas, and there are still some unanswered questions."

Trump said that the deal would strengthen trans-Atlantic ties, and include an investment pledge on top of the $550 billion agreement signed last week with Japan. He claimed the U.S. had been unfairly treated for years by Japan.

This will provide clarity to European car, plane and chemical manufacturers. The EU initially hoped to achieve a zero-to-zero deal. The 15% baseline tariff is an improvement over the threatened rate 30% but compares with an average U.S. tariff rate on imports of around 2.5% in the last year, before Trump returned to the White House.

Von der Leyen told reporters that Trump was a "tough negotiator" and it was the best they could do.

The European stock market opened on Monday with all major bourses in green and the STOXX at its highest level in four months. Stocks in the tech and healthcare sectors led the way.

Mohit Kumar, an economist at Jefferies, said that the 15% rate was better than what the market had feared.

The German Chancellor Friedrich Merz said that the agreement avoided a trade war which would have severely affected Germany's export driven economy and its huge auto sector.

A BIT MORE CLEAR, BUT "NOT THE END"

French ministers stated on Monday that although the deal was not balanced, it had merits.

Marc Ferracci, the industry minister, said that more discussions - possibly lasting weeks or even months - were needed before a deal could be officially concluded.

He told RTL Radio that "this is not the end" of the story.

European companies were left to wonder whether they should be happy or sad about the agreement.

"Those who expected a hurricane will be grateful for a thunderstorm," said Wolfgang Grosse Entrup. He is the head of VCI, the German Chemical Industry Association.

"We have avoided a further escalation." The price for both sides is still high. Exports from Europe are becoming less competitive. "The tariffs are paid by the customers in the United States," he stated.

Stellantis' shares rose 3.5%, Valeo's car parts rose 4.7% and Merck KGaA grew 2.9%.

The EU has promised to invest hundreds billions in the U.S., and to increase the energy purchases by a large amount.

It wasn't immediately clear whether specific promises of increased investment had been made, or if the details were still to be worked out.

While the EU has pledged to spend $750 billion on strategic purchases in the next three-year period, including oil and liquefied gas (LNG), the U.S. is struggling to meet this demand.

Although U.S. gas production capacity will almost double in the next four-years, it won't be enough to increase supplies to Europe. And oil production this year is expected to fall short of previous forecasts.

Analysts stressed that despite the remaining unknowns, the agreement still helped to reduce uncertainty. The euro and oil prices both rose on Monday.

Rodrigo Catril is a senior currency strategist with the National Australia Bank. Reporting by Phil Blenkinsop; Writing by Ingrid Melander and Joe Bavier; Editing by Joe Bavier

(source: Reuters)