A contentious trade agreement between the US and EU, finalized at Donald Trump’s Scottish golf resort, has drawn sharp rebuke from France and German industry groups. While the deal averts steeper tariffs, critics say it imposes unfair burdens on European exporters and marks a troubling shift in transatlantic relations.

The new US-EU trade agreement, sealed on Sunday in a ballroom at Trump’s golf resort in Scotland, introduces a 15% tariff on nearly all European exports to the US, including automobiles. While the deal averts Trump’s looming August 1 deadline that threatened a 30% tariff hike, it falls short of the zero-tariff trade framework initially proposed by the EU.

The accord subjects EU exporters to significantly higher duties, replacing the current average tariff of 4.8% with rates more than triple in some sectors. Negotiations are still ongoing regarding steel, which remains under a 50% tariff, as well as aviation and pharmaceutical exports, which face continued uncertainty.

France decries ‘submission’ to US demands

French Prime Minister Francois Bayrou condemned the agreement as a capitulation to US pressure. “It is a dark day when an alliance of free peoples…resolves to submission,” he wrote on X. His statement reflects growing frustration within Paris over the EU’s perceived concessions.

German Chancellor Friedrich Merz offered cautious praise for the deal, noting it avoids a full-blown trade war. However, key German industry groups voiced alarm. The BDI industrial federation warned of “considerable negative repercussions,” while the VCI chemical association criticized the high tariff levels.

In a related vein, France's European Affairs Minister Benjamin Haddad reacted to the deal early on Monday, saying it had some merits, such as exemptions for some key French business sectors, but was "unbalanced".

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German automakers are expected to bear the brunt of the deal, with the 15% automotive tariff posing a serious challenge during a critical industry transition. Hildegard Muller, president of the car industry federation VDA, welcomed the agreement in principle but warned of substantial financial strain ahead.

Markets react to tariff relief

Despite the criticism, European stock markets responded positively to the resolution. Germany’s DAX climbed by 0.86%, while France’s CAC 40 rose by 1.1% on Monday, driven by relief that a damaging escalation had been avoided.

Ireland, one of the EU’s leading exporters to the US, cautiously welcomed the stability brought by the deal but expressed regret over the baseline tariff. Italy’s UniCredit bank was more blunt, describing the outcome as “heavily asymmetrical” and skewed in favor of Washington.

German bank Berenberg said Trump secured a clear political win, arguing the agreement left Europe worse off than before his tariff campaign began. “The extra US tariffs will hurt both the US and the EU,” said chief economist Holger Schmieding. “For Europe, the damage is mostly frontloaded.”

European Commission President Ursula von der Leyen acknowledged the imbalance, calling the 15% tariff “not to be underestimated” but the most favorable outcome under the circumstances. She had initially tried to pressure Washington with a suspended €21bn retaliatory list, later escalating to €73bn in potential levies.

Following June’s NATO summit, the EU shifted toward a swift deal in exchange for renewed US security commitments, shelving its original ambitions for a comprehensive trade pact. In contrast, China continues to negotiate with the Trump administration, which recently paused tech-transfer restrictions to facilitate talks with Beijing.

Steel, pharma remain sticking points

While von der Leyen insisted a quota system would soon replace flat steel tariffs, Trump publicly rejected such a carve-out, saying duties would remain unchanged. He also dismissed exemptions for pharmaceutical products, though von der Leyen later confirmed that a 15% tariff would apply to EU medicine exports.

European exporters now face a 25% tariff on vehicles, 50% on steel and aluminum, and a general 10% levy, rates that had been poised to rise to 30% without the deal. Efforts to shield critical sectors like aviation, spirits, and automotive manufacturing largely fell short, deepening concern in France and Germany over long-term competitiveness.

Read more: Trump blindsides EU in trade talks, repeats global deceptive patterns