On Sunday, Trump met with European Commission President Ursula von der Leyen and finalized a major trade deal with the EU—just ahead of his self-declared August 1st “tariff deadline.” This came right after the U.S. also wrapped up its deal with Japan last week. With these two agreements in place, the U.S. has now locked in trade deals with almost all major economies—except China. So while Trump’s aggressive tariff campaign may seem to have paused for now, the ripple effects and longer-term risks are far from over.
What's in the Deals?
In the EU$Vanguard FTSE Europe ETF(VGK)$ deal, the U.S. agreed to impose a flat 15% tariff on goods imported from the EU—including most vehicles—which is much lower than the previously threatened 30%. But there’s still disagreement about whether pharmaceutical products fall under that 15% rate. Meanwhile, tariffs on aluminum and steel stay high at 50%. On the flip side, EU countries will eliminate tariffs on U.S. goods, open their markets, and commit to buying $750 billion worth of U.S. energy products. They’ll also invest $600 billion directly into the U.S. and ramp up purchases of American military technology.
Source: X, Truth Social
In the Japan$Nikkei 225 Index(N225.JP)$ deal, the U.S. also sets a 15% flat tariff on Japanese goods (again, lower than the earlier 25% threat). In return, Japan promises $550 billion of U.S.-directed investment—mainly in core U.S. industries like infrastructure, semiconductor manufacturing, mineral processing, and pharmaceutical production. Japan will also increase its quota of duty-free U.S. rice by 75%, buy $8 billion worth of U.S. farm goods, accept U.S. auto standards for the first time (meaning American-made cars can finally get into Japan more easily), and buy 100 U.S.-made civilian aircraft like Boeing jets.
Source: Truth Social
Tariff Threats Paused, But Not Gone
At first glance, these deals look like compromises on both sides. But in reality, the U.S. gave up less than it seems. The so-called “concessions” from Trump are really just him pulling back from extreme tariff threats that weren’t sustainable to begin with. What he got in return—huge purchases, major investment commitments, and more market access—are big wins for the U.S. economy, jobs, and his re-industrialization narrative.
For markets, the biggest short-term impact is clear: uncertainty just dropped. Trump’s so-called “TACO” threats didn’t turn into a full-scale trade war. A 15% flat rate is actually better than many feared, which eases inflation worries a bit too. That said, markets had already priced in some level of deal, so the reaction wasn’t huge.
The Hidden Risks Still Ahead
Even though these agreements give the market some breathing room, there’s still a lot to be cautious about. As von der Leyen herself said, the 15% tariff was “the best we could agree on”—it brings some stability, but also locks in a U.S.-led reset of the global trade system. And that comes with some real consequences.
1. Other countries might feel they lost out Let’s be real—these deals clearly tilt in favor of the U.S., and not everyone’s happy about it. Within the EU, several officials and leaders have openly criticized the deal, saying that 15% isn’t much better than 30% in terms of real-world impact. They worry this could damage the rules-based global trading system. And when countries start pumping hundreds of billions into the U.S. instead of their own economies, it can hurt local jobs and industries. There’s also a risk that Trump’s “grab-what-you-can” approach could backfire—possibly triggering consumer boycotts of American products or a loss of trust in U.S. leadership.
2. A new global tariff floor? Trump has floated the idea of raising baseline tariffs on most countries to 15–20%. With both the EU and Japan now locked into 15%, that could easily become the new normal. If that happens, we’re likely to see higher import costs, stronger inflation pressure, and more reason for the Fed to hold off on cutting interest rates.
3. Lots of vague details, not much enforcement One of the biggest red flags is that these agreements are missing a lot of important details. There’s no clear timeline for when investments or purchases need to happen. No penalties if countries don’t follow through. And no real enforcement mechanism. That kind of loose structure leaves the door wide open for future disputes.
4. Japan might start hiking rates Japan’s inflation is still over 3%, and the central bank has said they were holding off on raising rates because of tariff uncertainty. Now that part of the uncertainty is gone—and the final deal isn’t as bad as expected—expectations for a rate hike are building. If Japan does raise rates, the yen could strengthen, and carry trades (borrowing in yen to invest in higher-yield U.S. assets) might unwind. That could lead to capital flowing out of U.S. markets and weigh on asset prices.
5. China$China A50 Index - main 2507(CNmain)$ is probably next Let’s not forget: Trump hasn’t made a deal with China yet. And now that he’s “wrapped up” talks with Japan and the EU, it’s likely he’ll shift focus to China—his biggest and toughest target. U.S.-China negotiations have been stalled for a while, with little real progress. But now they’re back in the spotlight. And compared to the EU or Japan, China is a whole different game. If that negotiation turns tense—and it probably will—it could become the biggest risk factor for markets going forward.
Invesight Viewpoint
The deals with the EU and Japan might bring short-term peace, but they were struck under heavy pressure, not mutual trust. They ease immediate worries, yes—but they also signal that the U.S. is redrawing the global trade map on its own terms.
More importantly, with US-China trade negotiations likely to be the next battleground, the most difficult and unpredictable fight may still lie ahead.
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