What: The EU-US trade agreement establishes a 15% tariff framework with strategic sector exemptions, marking a significant shift in transatlantic trade relations.

Why it is important: The framework's impact on retail pricing and sourcing strategies comes at a critical time when consumer confidence is already showing its sharpest decline since 2021, with 62% expressing concern about rising costs.

The newly announced EU-US trade framework represents a significant development in international commerce, establishing a 15% tariff rate for EU imports into the US. This agreement includes strategic exemptions for several sectors, including aerospace, chemicals, semiconductors, and certain food products, which will maintain zero tariffs. The automotive sector sees a notable shift from the previous 27.5% rate to the new 15% ceiling, though complexities remain regarding the stacking of tariffs with existing rates. The framework's implementation has immediate implications for supply chains, with steel and aluminum still subject to separate negotiations for potential tariff rate quota arrangements. The EU has committed to substantial energy purchases and direct investment in the US, though the specifics and enforcement mechanisms remain unclear. This agreement adds to the growing patchwork of bilateral trade deals that increasingly characterise global commerce, potentially challenging WTO principles while reshaping international trade relationships.

IADS Notes:

The retail landscape has undergone significant transformation throughout early 2025. In January, BCG's analysis projected staggering additional import costs of $640 billion from expanded tariffs, catalysing widespread industry restructuring. February saw the elimination of the $800 de minimis rule, disrupting e-commerce operations and affecting 4 million daily shipments. By March, 62% of consumers expressed serious concern about rising retail prices, while major retailers like Costco and Walmart actively pressured Chinese suppliers for price concessions. Consumer behaviour shifted dramatically, with data showing 84% of shoppers reconsidering their purchasing strategies. The impact became increasingly visible in May, when consumer confidence recorded its sharpest decline since August 2021. By July, department stores were implementing strategic price increases, with footwear leading at 4.2%, demonstrating how tariff impacts were finally reaching consumers after retailers' initial absorption efforts.

The EU-US trade agreement: Some clarity and ongoing uncertainty