The threat of a full-scale trans-Atlantic trade war has been averted with the deal, or at least the outline of one, struck between the US and European Union at the weekend. As was the case with last week’s deal with Japan, though, both sides have differing interpretations of what they’ve agreed to.

There’s no disagreement on the baseline tariff of 15 per cent on all EU exports to the US imposed by the deal, which European Commission president Ursula von der Leyen said was “the best we could get”. Before Trump regained office, the average tariff on EU exports was 2.5 per cent.

European Commission president Ursula von der Leyen and US President Donald Trump shake hands on a new deal. Credit: Getty Images

Exactly what the new rate will apply to, however, isn’t clear.

Von der Leyen said it would apply to European cars, pharmaceuticals and semiconductors, while Donald Trump said pharmaceuticals were “unrelated to this deal”. The US has separate investigations of pharmaceuticals and semiconductors under way that could lead to sectoral tariffs on imports of those products – and another bout of confrontation and negotiation.

The new baseline tariff was, Trump said, in exchange for the EU “opening up their countries at zero tariff”, whereas the EU says the agreement for “zero for zero” tariffs relates to certain strategic products and their parts, such as chemicals, semiconductor equipment and some agricultural products, and is a framework agreement that could lead to a lowering of tariffs on other products in future.

The deal, like the handful of others the Trump administration has struck in recent weeks, has been described as a “road map” for a detailed agreement rather than a conventional trade deal. There are, therefore, many grey areas in the agreement that will need to be filled in.

The agreement – once there is a document to agree to – would also have to be ratified by the European Parliament and the 27 individual national parliaments of the EU’s members before it could take effect. All of Trump’s bigger trade deals........

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