The European Union’s 15% blanket tariff agreement with the US, often touted by officials as an “insurance policy,” is facing its first major test amid Donald Trump’s new protectionist offensive. The paradox is that while the policy provides a baseline of protection, it is proving insufficient to prevent targeted attacks or to quell the deep anxiety gripping European industries.
On one hand, the “insurance policy” is working as intended for some. It prevents the US from imposing the kind of extreme, 100% tariff on EU pharmaceuticals that the UK is now facing. This gives the EU a degree of stability that London currently lacks, reinforcing the value of having a comprehensive deal in place.
On the other hand, the policy is showing its limitations. The US has signaled its intent to bypass the agreement by launching a “section 232” investigation into medical devices, a move that could lead to new tariffs on a key EU export sector. This suggests the “insurance policy” has loopholes that the US is actively seeking to exploit.
Furthermore, the deal cannot insulate EU companies from the broader economic fallout. German truck makers, though part of the EU bloc, are still directly targeted by a 25% tariff. And companies like Sweden’s Ikea, while covered by the 15% rate, still report that the overall trade environment is making business “more difficult.”
This paradox places the EU in a complex position. It can rightly claim its agreement is better than nothing, as the UK’s current predicament demonstrates. However, it must also confront the reality that its “insurance policy” is not foolproof. The coming months will be a crucial test of whether this policy is a sturdy shield or a leaky umbrella in the face of a sustained trade storm.