American imports on luxury goods from Europe incur higher costs due to tariffs, while certain other items remain unaffected.
The United States and the European Union (EU) have announced a new trade agreement on July 27, 2025, which includes a uniform tariff rate of 15% on most goods from the EU. This tariff rate applies broadly across affected industries, including automotive, electronics, wines, spirits, luxury goods, cosmetics, industrial equipment, and pharmaceuticals.
The new tariff rate represents a significant increase from previous average tariffs, which were around 1.2% in 2024. This change affects various sectors, such as the automotive industry, which exported nearly 750,000 cars worth €38.5 billion in 2024.
The tariffs come at a time when the strengthening of the euro against the dollar has been impacting European products for U.S. clients since the beginning of the year. The U.S.-EU trade relationship, representing 30% of global trade, has been under strain due to these factors.
Notably, the aerospace sector is exempt from tariffs. However, industries such as automobiles, luxury goods, cosmetics, industrial equipment, and electronics will be subject to the 15% tariff. This change has led companies like Nokia, the Finnish telecommunications equipment manufacturer, to revise their 2025 outlook downwards, partly due to the tariffs.
French company Legrand estimated the cost of tariffs between 150 and 200 million euros, but confirmed its objectives and plans to compensate with temporary price increases and production in lower-cost countries. Similarly, François-Henri Pinault of Kering group, which owns Gucci and Balenciaga, stated that Italian-made Gucci bags would not be produced in Texas.
In response to the tariffs, some companies are considering relocating a part of their production to the United States. For instance, L'Oréal, which achieved 38% of its turnover in the United States in 2024, mentioned the possibility of relocating a part of the production there. The Louis Vuitton workshop in Texas has also been announced.
The tariffs on European automobiles have been reduced to 15%, down from 2.5% before Trump's return to the White House and compared to 27.5% since April. Certain agricultural products, including wines and spirits, will be exempt from the 15% tax, but the specific list has not been specified.
Pharmaceutical products are the most exported goods from Europe to the United States, with nearly 120 billion euros in 2024. They will not benefit from any special treatment under the tariffs. Industrial machines and equipment, as well as electrical and electronic goods, have annual exports of 90 and 45 billion euros to the USA respectively.
The U.S. and European Industries will face a 15% tariff starting August 1st. The agreement comes at a time when the strengthening of the euro against the dollar has been impacting European products for U.S. clients since the beginning of the year. The U.S. had a deficit of €198 billion on goods exchanged with the EU in 2024.
This new trade agreement is a significant development in the U.S.-EU relationship, with far-reaching implications for various industries on both sides of the Atlantic. Companies will need to adapt to these changes to maintain their competitiveness in the global market.
- The new trade agreement includes a uniform tariff rate of 15% on most goods from the EU, impacting industries such as automotive, electronics, wines, spirits, luxury goods, cosmetics, industrial equipment, and pharmaceuticals.
- L'Oréal, which achieved 38% of its turnover in the United States in 2024, mentioned the possibility of relocating a part of the production there in response to the tariffs on European automobiles.
- The tariff on food-and-drink products is not clear, with certain agricultural products like wines and spirits being potentially exempt from the 15% tax.
- With the strengthening of the euro against the dollar, the automotive industry, which exported nearly 750,000 cars worth €38.5 billion in 2024, is affected significantly by the tariffs.
