Does Trump’s new ‘surcharge’ make EU worse off than under trade deal?

The EU has demanded that the United States stick to the terms of a trade deal they agreed last year after the U.S. Supreme Court struck down President Donald Trump's global tariffs and he responded with a new, across-the-board "import surcharge".

WHAT ARE THE TERMS OF THE 'TURNBERRY DEAL'?

Trump and European Commission President Ursula von der Leyen concluded a deal at Trump's Turnberry golf course in Scotland last July.

It set a broad 15% U.S. tariff for most EU exports or, for a very small range of products, the pre-existing most-favoured nation (MFN) duty rate if that is higher than 15%. Steel and aluminium tariffs remained at 50%, while no extra tariffs applied for a limited number of EU goods, including unavailable natural resources such as cork, aircraft and aircraft parts and generic pharmaceuticals and their ingredients.

Washington also agreed to reduce its tariff for EU car imports to 15% from a previous 25%.

The European Union committed to remove its import duties on all U.S. industrial goods and to provide preferential market access for a wide range of U.S. seafood and agricultural goods, as well as to extend zero tariffs for U.S. lobsters, as initially agreed with Trump in 2020.

WHAT DOES THE 'IMPORT SURCHARGE' MEAN FOR THE EU?

The Supreme Court ruled that Trump had exceeded his authority in using the 1977 International Emergency Economic Powers Act, which was the legal basis for the broad 15% tariff on EU products.

So those tariffs have been superseded by Trump's new "import surcharge", which the U.S. began collecting at a 10% rate on Tuesday. The Trump administration is working to increase the rate to 15%, the level that had generally applied to EU exports.

However, unlike the tariff terms of the EU-U.S. trade deal, the surcharge applies in addition to the MFN rate.

The surcharge does not affect the tariffs on cars or steel and does not apply to critical minerals, pharmaceuticals, some electronic products, beef, tomatoes and oranges and any products subject to 'Section 232' tariffs imposed on grounds of national security.

The EU has acknowledged it faces a "transition period" of a few months during which U.S. tariffs will be higher for certain EU exports.

WHICH EU PRODUCTS FACE HIGHER TARIFFS?

Given the average U.S. MFN duty is 3.4%, overall tariffs (MFN+10%) for many EU products under the new system will be lower than 15%, particularly for industrial goods. It does become problematic if and when the surcharge rate rises to 15%.

Some EU exports, though, face higher tariffs than before. The European Commission says 7% of EU exports to the U.S. are subject to an MFN duty above 5%. EU goods exports to the U.S. totalled 536 billion euros ($631.9 billion) in 2024.

Products affected include textiles, clothing and shoes, with rates on footwear up to 48%, and consumer goods, including suitcases and handbags, glassware, pillows and cushions and some light fittings.

Of agricultural and food goods, MFN rates above 5% apply for many dairy products, with Edam and Parmesan cheeses at 10% and Roquefort at 8%, as well as for certain fruit and vegetables, including melons, strawberries, Brussels sprouts and carrots.