According to the Institute of German Economy (IW), the customs deal with the United States appears to have provided the European Union with a competitive advantage compared to Asian rivals. Specifically, the auto sector benefited from the reduced tariffs, while the mechanical engineering industry experienced an increase in duties.
Analysis of the US tariffs between April 2025 and February 2026 found that the effective US rate for imports from the EU averaged 7.8 percent. By contrast, goods originating from China were subjected to nearly 37 percent in tariffs. While Germany benefited significantly from the US-EU pact-with its effective US tariff rate dropping to an average of 10.6 percent, nearing the EU average of 8.2 percent-a major issue arose in the machinery sector.
Following the deal, the effective EU tariff rate for mechanical engineering products climbed to an average of 12.6 percent. The US government categorized machines that contain large proportions of steel as steel products, applying a steep 50 percent tariff. Samina Sultan, an economist at IW, noted that this development undermines the overall value of the agreement, necessitating urgent renegotiation.
