After U.S.-Japan, U.S.-EU Nears 15% Tariff Deal — Euro and European Stocks Rally, But Risks Remain

TradingKey - Following the U.S.-Japan agreement on a 15% tariff rate, the United States and European Union are now reportedly close to reaching a similar trade deal — reinforcing market expectations that the Japan accord served as a template for broader negotiations.

News of a potential breakthrough sent European stocks higher and boosted the euro, while gold prices dropped over 1%, as fears of a transatlantic trade war eased.

According to the Financial Times, citing three people familiar with the talks, the U.S. and EU are nearing a deal under which:

• The tariff rate on EU exports to the U.S. could fall from the previously threatened 30% to 15%
• The current 27.5% tariff on European cars would be reduced to 15%

U.S. President Donald Trump had previously warned that if no agreement was reached by the August 1 deadline, the EU would face tariffs of up to 30%.

The EU has not backed down. On Wednesday, reports emerged that the bloc plans to impose retaliatory 30% tariffs on $100 billion worth of U.S. goods. Germany and France are also pushing for the use of the EU’s Anti-Coercion Instrument, underscoring their tough negotiating stance.

U.S.-Japan Deal Sets a Precedent

On July 23, after eight rounds of talks, the U.S. and Japan reached an agreement to set tariffs on Japanese exports at 15%, accompanied by Japan’s commitment to increase imports of U.S. rice and invest $550 billion in the U.S. over the next decade.

While the EU faces more complex internal dynamics — including divergent interests among member states — some analysts believe the U.S.-Japan deal could serve as a model for the transatlantic negotiations.

Market Reaction: Stocks, Euro Up — Gold Down

As trade tensions eased:

• The Stoxx 600 Index extended gains to +1.08%
• EUR/USD rose 30 pips to 1.1752
• Gold prices fell 1.29% to $3,386.25 , breaking below $3,400

U.S. automakers with strong European exposure rallied sharply:

• Stellantis (STLA.US) +12%
• General Motors (GM.US) +6%
• Ford (F.US) +2%

However, a U.S. official cautioned that the situation remains fluid and could change. The EU also said that member states will vote on Thursday regarding retaliatory tariffs on American goods — a sign that the final agreement is not yet locked in.