The EU-US Trade Deal: Informalization in Action

On July 27th, 2025, European Commission President Ursula von der Leyen and US President Donald Trump reached a transatlantic trade deal. This agreement emerged from negotiations following the Trump administration’s imposition of historically high tariffs—levels not seen since World War II. While the deal has sparked extensive commentary on its strategic merits, less attention has been paid to its legal and constitutional form. This blog post argues that the EU-US deal exemplifies a troubling trend: executive-led decision-making that sidelines democratic institutions, particularly the European Parliament.

Key provisions of the deal

The deal itself sets a 15% tariff ceiling on most EU exports to the United States. Though high, this ceiling marks a reduction from previous tariffs on key sectors such as automobiles, pharmaceuticals, and semiconductors. It reinstates pre-2025 tariffs on strategic goods like aircraft and chemicals, protects steel and aluminum through quotas, and liberalizes select US imports. The EU, in turn, agreed to eliminate low industrial tariffs and open limited access to US fishery and agricultural products, including lobsters and soy-derived oils. The agreement also outlines cooperation on standards, economic security, and energy—with the EU either committing to or expressing interest in purchasing $750 billion in US energy and €40 billion in AI chips, depending on the press release.

Public Reaction

Public reaction to the deal has been mixed. Some view the EU’s lack of retaliation as beneficial to the global trading system, while others criticize it as appeasement of a coercive partner. I have previously advocated for a robust EU response to US trade aggression, including meaningful retaliation. The EU, as one of the world’s largest consumer markets, holds significant leverage. US companies rely on access to the EU market just as much as EU firms depend on the US. As a defender of the multilateral trading system, I had hoped the EU would resist US efforts to undermine principles like the most-favoured-nation rule, which prohibits discriminatory tariffs. Instead, the EU has agreed to a deal that subjects its exports to the US to a discriminatory 15% tarrif.

However, the broader context reveals a more complex picture. As Maroš Šefčovič, the EU trade commissioner, seemed to acknowledge, the trade deal appears to be part of a larger US pressure campaign that intertwines trade with security. It is plausible that the US leveraged its role as Europe’s primary security provider to extract trade concessions. Given the EU’s real dependence on US capabilities, this deal may represent the best outcome achievable under a protectionist US administration.

Legal Nature of the Agreement

Equally concerning, but less discussed in the online commentary, is the legal nature of the agreement. At closer inspection, it can hardly be considered an agreement at all. Under the Vienna Convention on the Law of Treaties (VCLT), a ‘treaty’ is ‘an international agreement concluded between States in written form and governed by international law, whether embodied in a single instrument or in two or more related instruments and whatever its particular designation.’ The VCLT is not formalistic; the form of the agreement does not matter much. A treaty can even be oral. What matters is that there has been a meeting of the minds, an intention to make an agreement under international law.

The EU-US ‘deal’ does not meet that condition. The European Commission’s explainer mentions explicitly that ‘[t]he political agreement of 27 July 2025 is not legally binding.’ The deal is meant as a an agreement on the ‘key parameters’ of the EU-US trade relationship moving forward, and a ‘first step in a process that will be further expanded over time to cover additional areas and continue to improve market access.’

However, at the same time, the press release does speak of ‘commitments’, including a US commitment to establishing a ‘single, all-inclusive US tariff ceiling of 15% for EU goods.’ EU commitments, by contrast, are vague and arguably do not meet the threshold of legally binding commitments.

Particularly noteworthy is the paragraph on EU investments in the US, where the deal speaks of a commitment to ‘[p]romoting and facilitating mutual investments on both sides of the Atlantic’, added by an explanation that ‘EU companies have expressed interest in investing at least $600 billion (ca. €550 billion) in various sectors in the US by 2029, further boosting the already significant €2.4 trillion in existing investment.’ Compare that to the fact sheet released by the White House, which simply states that ‘[t]he EU will purchase $750 billion in U.S. energy and make new investments of $600 billion in the United States, all by 2028’ (own emphasis).

Since a meeting of minds requires at least two minds, the EU’s language here is revealing. It lends support to the analysis of the NY Times Brussels correspondent, according to which ‘the European Union has handed America feel-good triumphs while dodging, at least for now, several of its most painful demands.’

Political Promises and Realities

Given the vagueness of the language used and the explicit statement in the Commission press release that it is not legally binding, the ‘deal’ could be dismissed as nothing more than a political promise to continue to talk.

However, political promises do matter as they create political—and in the case of trade policy: economic—realities that become difficult to undo. The 15% tariff on EU imports into the US will stick as industries that benefit from them will lobby for their continuation—unless, of course, the US Supreme Court concludes the US President lacked the legal authority to impose such tariffs in the first place. (On the court challenges brought against the tariffs, see e.g. here and my earlier assessment here).

Constitutional Implications

Putting the issue of their domestic legality to the side for a moment, however, the  ‘deal’ poses yet another challenge to the constitutional values and principles underpinning trade policy in the EU. The Lisbon Treaty introduced a treaty-making procedure that requires the European Parliament to grant its consent to trade agreements, and allows the Council to decide on such agreements by qualified majority vote (QMV) rather than unanimity.

This procedure applies only to treaties in the meaning of the VCLT, namely to agreements that are binding under international law. Where an agreement is not binding under international law, the procedure involving both Council and Parliament does not apply. In the 2016 Swiss MoU case, the Court of Justice of the EU (CJEU) made clear that non-binding agreements require Council approval where they involve policy-making.

As a general rule, the Council operates by QMV. One would expect QMV to apply also to the granting of consent to non-binding instruments related to trade, yet whether it does so in practice is difficult to tell. The culture of consensus within the Council is strong, and a unanimous agreement among all Member States is likely pursued, even where, legally, it would be possible to override the objections of a couple of Member States. By contrast, and importantly: as I discussed elsewhere, under the non-binding instruments arrangement, the European Parliament does not get a say.

Where a political agreement constitutes a stepping stone towards a legally binding free trade agreement, this would not necessarily be a problem. If the European Parliament has a veto power at the end of the process, it can leverage that power to gain influence over the negotiations.

Yet, in the case of the EU-US ‘deal’, it seems unlikely that such a legally binding agreement will ever be forthcoming. As Jamieson Greer, the US Trade Representative, made clear in a recent op-ed: the US administration operates through informal ‘deals’ that it can—or at least tries—to enforce through (threats of) unilateral tariffs. It does not want to engage in formal treaty-making that would require Congressional approval.

Conclusion

Against this backdrop, the political agreement reached by Commission president von der Leyen with US president Trump is problematic in constitutional terms. Absent any perspective of a formal trade agreement that does require parliamentary approval, it represents another case of executive empowerment whereby the EU agrees to engage by the terms set out by an autocratic leader with contempt for constitutional values such as democracy or the rule of law.

The EU-US deal can be compared in this sense to the migration ‘deals’ the EU—Team Europe—has been making with autocratic leaders across the Mediterranean. There, too, informal, executive deals have been privileged over formal agreements that require parliamentary approval. The difference being, of course, that in the case of the EU-US trade deal, the EU is the victim rather than the bully.

If the European Commission takes seriously its commitment to representative democracy, it would ask the European Parliament to vote on the agreement reached, and to accept the outcome of that vote. Of course, the European Parliament can do so on its own initiative by adopting a resolution. It will be interesting to see if it will do so.

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