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The European Union and the United States have struck a tentative trade deal to avert a potentially devastating tariff war between two of the world’s largest economies, capping a race against time before a self-imposed deadline of 1 August.

Under the agreed terms, finalised on Sunday by European Commission President Ursula von der Leyen and US President Donald Trump during a meeting in Scotland, the majority of EU exports bound for the American market will be slapped with a 15% tariff.

The tariff for US exports bound for the EU market was not immediately clear.

“I think it’s great we made a deal today instead of playing games,” Trump said at the end of the meeting. “I think it’s the biggest deal ever made.”

“We have a trade deal between the two largest economies in the world. And it’s a big deal. It’s a huge deal,” von der Leyen said. “It will bring stability, it will bring predictability. That’s very important for businesses on both sides of the Atlantic.”

Von der Leyen noted the 15% tariff would be “across-the-board” and “all-inclusive”.

“It was tough negotiations (but) we came to a good conclusion,” she said, highlighting the “openness” of the EU market, which Trump had challenged.

Both leaders shook hands to applause in the room.

“We were able to make a deal that’s satisfactory to both sides, so it’s a very powerful deal. It’s the biggest of all the deals,” Trump said.

The 15% rate is lower than the 20% rate that Trump imposed, and later paused, in April as part of his contentious, self-styled “reciprocal tariffs”, as well as the 30% rate that he threatened to slap in a letter sent to von der Leyen earlier this month.

The 15% rate is also inferior to the rates that other countries have negotiated with the White House in recent days, including Indonesia (19%) and the Philippines (19%), and matches the number granted to Japan (15%), a G7 ally.

Still, it represents a painful concession, considering the talks began with von der Leyen offering a “zero-for-zero” tariff agreement. Through the back-and-forth process, von der Leyen repeatedly warned that “all options”, including a never-used instrument against economic coercion, were on the table in case of an undesirable scenario.

As tensions mounted, the European Commission prepared several lists of retaliatory measures against US products worth €93 billion in total.

Brussels never resorted to any tit-for-tat measure due to stark differences between member states. Some member states, like France and Spain, advocated a show of force, while others, like Germany and Italy, pushed for a quick deal.

The ideological gap closed after Trump made his 30% threat, which prompted outrage across the bloc and hardened the mood towards retaliation.

The end of the story?

Before Trump’s arrival disrupted transatlantic commerce, EU-made products were subject to an average tariff rate of 4.8% upon entering US territory. Sunday’s deal will presumably entail an additional 10% to reach the 15% mark.

The US currently imposes 50% tariffs on steel and aluminium, 25% on cars, and 10% on all other imports coming from the bloc, so the change in practice will be limited.

In the long term, however, the increase in tariffs is expected to significantly dent the profits of export-oriented companies that rely on the wealthy American market.

Asked about what concessions the US had made, von der Leyen replied with a general remark about shared prosperity.

“The starting point was an imbalance, a surplus (of goods) on our side and a deficit on the US side. We wanted to rebalance the trade relation, and we wanted to do it in a way that trade goes on between the two of us across the Atlantic,” she said.

“I think it’s going to be great for both parties,” Trump said.

Sunday’s meeting came amid sky-high expectations due to the looming deadline of 1 August that Trump had imposed to force nations to either offer far-reaching concessions or face punishing tariffs.

Von der Leyen was accompanied by Maroš Šefčovič, the European Commissioner for Trade, who has spent the last few months travelling across the two sides of the Atlantic Ocean in an attempt to gain a better understanding of the White House’s demands.

She was also joined by her powerful chef de cabinet, Björn Seibert; her trade advisor, Tomas Baert, and the Commission’s director general for trade, Sabine Weyand.

For the past weeks, von der Leyen and her team had been trying to make inroads in the negotiations to bring down the expected US tariff. The 15% rate was considered high but palatable if paired with carve-outs for strategic sectors.

A major concern has been pharmaceuticals, which the bloc exports at large volumes to the American market. The Trump administration has opened an investigation into pharma products, a step that can pave the way for a tailor-made tariff.

Ultimately, pharmaceuticals were not included in the EU-US deal, suggesting a new clash might be on the horizon.

“We have to have them built and made in the United States, and we want them made in the United States,” Trump told reporters. “Pharmaceuticals are very special. We can’t be in a position where (…) we’re relying on other countries.”

The saga might soon take another twist: next week, a federal appeals court in the US will begin hearing arguments in a closely-watched lawsuit challenging Trump’s authority to slap across-the-board tariffs under the pretext of a national emergency.

This article has been updated with more information.