George Alogoskoufis
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On July 27, 2025, the United States and the European Union reached a new trade agreement intended to stabilize transatlantic economic relations after months of rising tensions. The agreement, which introduces a uniform 15% tariff on most EU exports to the US while establishing European commitments to purchase American energy and invest in US infrastructure, represents a significant recalibration of one of the world’s most vital economic partnerships.
While the deal avoided a full-blown trade war, it marked a departure from decades of transatlantic trade liberalization. In order to determine which are the winners and losers from the agreement, one needs to examine its key provisions, and evaluates its short- and long-term effects on the economies of the United States and the European Union, taking into account trade flows, investment, inflationary pressures, sectoral impacts, and broader geopolitical considerations.
The 2025 EU–US trade agreement emerged in response to escalating trade threats from Washington, particularly regarding European automobiles, pharmaceuticals, and semiconductors. Faced with the prospect of tariffs as high as 30–50%, the EU agreed to a compromise framework consisting of four main pillars:
A Uniform 15% US tariff on most EU exports, including industrial and consumer goods. Although lower than initial threats, it remains significantly higher than the pre-agreement average of under 5%.
Strategic carve-outs for aircraft parts, chemicals, rare earths, and other sensitive materials through a “zero-for-zero” provision.
EU commitment to purchase $750 billion worth of US goods and services—primarily energy, semiconductors, and defense-related technologies—over a 5-year period.
EU investment pledge of $600 billion into US infrastructure, defense procurement, and digital connectivity.
The agreement’s asymmetry—higher tariffs for Europe in exchange for purchase and investment guarantees—has been interpreted by analysts as a strategic success for the US but a defensive concession by the EU.
Although President Trump appears to have won over the divided EU, a deeper analysis suggests that his ‘victory’ may prove ‘pyrrhic’ and that all sides stand to lose from the agreement.
Trump Wins but the ‘win’ could be ‘pyrrhic‘
- Trade Revenues and Inflation
The immediate effect of the agreement for the US is the imposition of a 15% tariff on most European imports, which is expected to generate substantial revenue for the federal government. Estimates suggest annual receipts may exceed $70 billion. However, this fiscal gain is accompanied by a moderate inflationary effect. As EU goods become more expensive, American consumers and businesses will face higher prices for imported goods, particularly in the automotive, pharmaceutical, and luxury sectors. Inflation may rise by 0.3–0.5 percentage points over the next 12 months, with the largest impact concentrated in urban areas with strong European trade links. - Investment and Sectoral Gains
A central feature of the agreement is the European commitment to invest $600 billion in US infrastructure, including ports, energy grids, AI research hubs, and military procurement. This is expected to significantly stimulate growth in several key US industries, such as energy, defence and semi-conductors. LNG exports are poised to rise, particularly from Gulf Coast terminals. European investments in American military technology will benefit contractors like Lockheed Martin and Raytheon. The US chip industry, already buoyed by the CHIPS Act, will receive additional European orders, accelerating supply chain relocation from East Asia to North America. These sectoral gains will likely contribute to an additional 0.4–0.6% in GDP growth in 2025–2026, helping the US economy maintain its post-pandemic expansion trajectory. - Political and Strategic Leverage
The deal consolidates American leverage over Europe. In strategic terms, it positions the US as the indispensable partner for energy, technology, and defense in a time of growing global fragmentation. However, it may erode the long-standing cooperative foundations of the transatlantic relationship, inviting political friction in the medium term. It should not be forgotten that critics in Europe labeled the deal a “dark day,” accusing Brussels of capitulation to U.S. pressure. If confidence erodes, Europe might respond economically or politically—resulting in further friction.
All in all it is doubtful whether the gains to US producers and the enhanced tariff revenue are sufficient to compensate for the large losses to US consumers. For this to happen, the tariffs must lead to a significant improvement in the US terms of trade with the EU, i.e a significant fall in the pre-tariff price of EU exports relative to US exports. This is rather unlikely to happen to the extent required. In addition, if the rise in US consumer prices leads to a further delay in the reduction of US interest rates, this may wipe out the benefits to US producers in the short term, through the effects of interest rates on economic activity.
While President Trump can tout a symbolic “win,” the US economy faces higher inflation, strained supply chains, and widespread uncertainty. The headline revenue gains may be offset by slower consumer activity and possible future retaliatory friction with the EU.
The Impact on the European Union
Because of the unbalanced nature of the agreement, the cost to the EU is expected to be higher.
- Export Costs and Growth Implications
For the EU, the 15% US tariff represents a significant cost shock to its export-dependent economies. German, French, and Italian industries—especially in the automobile, chemicals, and precision manufacturing sectors—are particularly exposed. With tariffs more than tripling on many products, companies face margin compression, reduced competitiveness, and in some cases, the prospect of job cuts or plant closures. Preliminary estimates from Eurostat and private sector forecasters project that the new tariff regime could reduce EU-wide exports to the US by 5–8% annually, translating into a 0.2–0.4 percentage point drag on GDP. Germany, as the bloc’s largest exporter to the US, is expected to face the brunt of this slowdown, with expected GDP revisions of −0.5% for 2025. - Internal Tensions and Fragmentation Risks
The agreement has also revealed internal divisions within the EU. Countries like Ireland and the Netherlands, whose sectors are highly exposed to US tariffs, have voiced concern about unequal burden-sharing. The situation is exacerbated by the fact that Northern Ireland, under the UK–US framework, faces only a 10% tariff, while the Republic of Ireland is subject to the full 15%. This discrepancy has led to renewed debate over the post-Brexit balance of power and economic policy coordination within the Union. Moreover, southern European economies, which benefit less from export-driven growth, have argued for broader EU compensation funds to support affected regions and industries. The result is a potential re-polarization of North–South economic interests within the bloc. For Greece, the impact is more subtle but still meaningful, largely via indirect channels such as EU growth, energy prices, and financial conditions. - Energy Security and Strategic Autonomy
The EU’s commitment to purchase US energy—a response to its post-Ukraine strategy of decoupling from Russian supplies—reinforces its dependency on transatlantic trade. While LNG imports from the US increase supply security, they also limit the EU’s ability to diversify sources or invest in long-term green alternatives. In the words of one EU energy commissioner, the deal represents “a bargain made from necessity, not strategy.”
The 2025 EU–US trade agreement represents a significant turning point in transatlantic economic relations. While it delivers immediate strategic gains for the United States, it imposes real costs on the European Union—both economic and political.
Though the agreement provides short-term stability and averts a trade war, it also signals a shift away from the open, rules-based multilateralism that defined transatlantic trade for much of the postwar era. In this new environment of managed trade and strategic recalibration, both Europe and smaller member states like Greece will need to adapt swiftly, build resilience, and diversify their economic relationships to thrive amid growing global uncertainty.
The Impact on Greece
The Greek economy’s direct exposure to the impact of the US-EU trade deal is limited.
Greek exports to the US account for around 5% of the country’s total exports (around €2.4 billion in 2024). The main export products — olive oil, feta cheese, wine — may suffer price increases due to tariffs, but the overall impact is considered limited.
Greece is most at risk from a slowdown in European demand and negative effects on partners such as Germany and Italy. This could affect Greek exports to the EU, tourism, especially from Germany, and financing conditions, through a tightening of the ECB’s interest rate policy. A leading Greek research institute, IOBE, has already reduced its growth forecast for 2025 from 2.4% to 2.2%.
Higher energy prices, driven by increased demand for LNG from the EU, could trigger new inflationary pressures. Inflation in Greece is estimated to reach 2.8% in 2025.
Greece can benefit by focusing on diversifying exports to Asia and the Middle East, leveraging EU funds for the green transition and digital economy, and developing its role as an energy hub in the Eastern Mediterranean.
In conclusion, the 2025 US-EU trade agreement is a defining turning point in transatlantic relations. While it provides short-term stability and prevents escalation, it clearly favors the US over the EU, although everyone is likely to lose from unilateral tariff increases.
For Greece, the direct consequences are limited, but the indirect effects — through the slowdown of the European economy, rising energy prices and investment uncertainty — are potentially significant. In this new environment of protectionism and restructuring, Greece must accelerate its strategy of extroversion, diversification and green growth.
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