EU–US Trade Agreement: A welcome pause, but strategic action is urgent

Temporary relief for retail and wholesale

The EU–US trade agreement reached on 28 July offers a much-needed pause in escalating tensions. The replacement of threatened 30% tariffs with a 15% levy on most goods provides European retailers and wholesalers with short-term predictability. However, this is not a resolution—it is damage control.

The new tariffs primarily target intermediate goods, inevitably driving up final product prices. Retailers and wholesalers, already operating on tight margins and bound by long-term contracts, face mounting pressure to absorb these costs without passing them on to consumers.

A sector under strain

Retail and wholesale are the backbone of the European economy, serving millions of consumers and businesses daily. Recent trade disruptions have dampened investment and eroded consumer confidence. ECB projections warn of a potential 0.4 percentage point drop in euro area GDP growth in 2025.

Adding to this strain is the surge in non-compliant imports from third countries. It is feared that the US tariff policy could lead to an increase in the number of attempts to bring low-cost products onto the European market, especially in third countries that are heavily affected by the tariffs (such as China). In 2024 alone, over 4.6 billion small parcels entered the EU—many below the €150 de minimis threshold and largely unchecked. This undermines consumer safety, distorts competition, and threatens the viability of compliant EU businesses.

Strategic priorities for the EU

To safeguard the sector and ensure long-term resilience, we urge policymakers to act decisively:

Accelerate trade diversification: Finalise agreements with key partners such as Mercosur, India, and Indonesia.

Strengthen the Single Market: Address fragmentation and boost competitiveness through harmonised standards and regulatory simplification.

Accelerate customs reform and enforcement: Swiftly implement coordinated enforcement of EU legislation and modernise customs systems to ensure a level playing field and protect consumers.

Trade diversification: A strategic imperative

The current situation underscores the urgent need for the EU to diversify its trade relationships. Overreliance on a few major partners leaves the retail and wholesale sectors vulnerable to geopolitical shocks. Diversification must be pursued on multiple fronts:

• Accelerating trade agreements: The EU must finalise and ratify pending trade deals with Mercosur, India, Indonesia, and other strategic partners. These agreements can open new markets, reduce tariff exposure, and create more resilient supply chains.
• Strengthening regional partnerships: Closer economic ties with neighbouring regions such as the Western Balkans, North Africa, and Eastern Europe can provide alternative sourcing and export opportunities.
• Supporting SMEs in global trade: Smaller retailers and wholesalers often lack the resources to navigate complex trade environments. EU programmes should support their access to diversified markets through simplified procedures, digital tools, and targeted funding.
• Investing in logistics and infrastructure: Efficient transport and customs systems are essential for viable diversified trade. The EU must prioritise investment in multimodal logistics, digital customs platforms, and the Single Window environment.

Diversification is not just a defensive strategy—it is a proactive step toward long-term competitiveness and economic sovereignty.

Looking Ahead

This agreement offers breathing space, but vigilance is essential. Retail and wholesale businesses require a stable, predictable environment to invest and grow. Strategic diversification, robust enforcement, and a stronger Single Market are not optional—they are essential.

The agreement is not yet legally binding, and negotiations continue. A key element under discussion is the Zero-for-Zero tariffs list—a range of strategic products eligible for mutual tariff elimination. This currently includes aircraft and components, selected chemicals, generic medicines, semiconductor equipment, specific agricultural goods, natural resources, and critical raw materials. The European Commission is working to expand this list further.