The European Union and the United States have issued a statement to formalize their tariff truce. Now the hard work begins. The framework agreement builds out the handshake trade agreement struck by European Commission President Ursula von der Leyen and U.S. President Donald Trump in Scotland in late July. The text sets out a roadmap for implementing the trade commitments they made. “This is not the end; it’s the beginning. This framework is a first step,” EU Trade Commissioner Maroš Šefcovič said. But the document, which runs to only four pages, skirts several issues. For one, it doesn’t mention U.S. calls for the EU to dilute its regulation of Big Tech. Nor does it refer to a call by Brussels for European wines and spirits to be exempted from the 15 percent U.S. baseline tariff that took effect this month. That’s one that Šefcovič still hopes to get a deal on. We break down the wins, the losses, the fudges — and the omissions — from the Framework on an Agreement on Reciprocal, Fair, and Balanced Trade. CARS  Under the joint statement, the U.S. will lower its 27.5 percent tariffs on cars and automotive parts to match the baseline 15 percent.  But there’s a catch: The U.S. will only meet its lower tariff commitment after the EU eliminates “tariffs on all U.S. industrial goods,” including its own 10 percent tariff on vehicles. Šefčovič said the Commission will initiate legislation this month to ensure Washington lowers tariffs retroactively on cars and auto parts effective Aug. 1, as foreseen in the deal. A separate clause of the joint statement makes clear that the two governments will start collaborating in other areas around cars, including to “provide mutual recognition on each other’s standards.”  The joint statement doesn’t clarify which standards will be mutually recognized, but any change will have ripple effects across the sector. “By signing up to mutual recognition of vehicle standards with the United States, the European Union has waved the white flag on road safety,” said Antonio Avenoso, executive director of the European Transport Safety Council. “This is not a technical detail — it is a political choice that puts trade convenience ahead of saving lives.” — Jordyn Dahl DRUGS, SEMICONDUCTORS, STEEL These industries are at the heart of Washington’s efforts to relocate industry back to the United States and are covered by separate trade investigations, known as Section 232, which allow the U.S. president to restrict imports to protect national security.  The U.S. will cap tariffs on European pharmaceuticals, lumber and semiconductors at 15 percent regardless of the results of the ongoing investigations.  Steel and aluminum imports will continue to face a 50 percent tariff until the EU and the U.S. explore the possibility of joining forces to tackle overproduction. | Erik S. Lesser/EPA This ceiling doesn’t apply to steel and aluminum imports, however, which will continue to face a 50 percent tariff until the EU and the U.S. explore the possibility of joining forces to tackle overproduction — especially coming from China — and the possibility of setting tariff-rate quotas. The European pharmaceuticals industry warns that the outline trade deal could cost companies up to €18 billion. “We remain concerned for the future of patients and our sector in Europe,” said Nathalie Moll, director general at Europe’s EFPIA pharma lobby. Still, while branded pharmaceuticals could end up being subject to the tariffs, the EU did succeed in broadening an exemption for lower-priced generics. — Camille Gijs and Mari Eccles DIGITAL RULES  The European Union managed to keep its rules on digital competition and content moderation out of the U.S. trade deal, despite heavy pressure. For now.  The Commission has for months maintained that its ability to regulate U.S. Big Tech companies is not part of the trade negotiations.  The Trump administration has been on a campaign, attacking both rulebooks and claiming they amount to censorship of Americans (the Digital Services Act) and unfairly target U.S. companies (the Digital Markets Act). While Šefčovič confirmed to reporters on Thursday that the rules weren’t part of the talks, he didn’t rule out that the two sides would return to the issue in the future.  “We kept these issues out of the trade negotiations. We were focusing on what was very clearly the priority and therefore you won’t find it referenced in the joint statement,” he said. “Will it come later, will it be discussed? Our relationship is so vast that for sure there will be a lot of issues which will be discussed.” European Parliament lawmakers will continue to pressure the Commission not to treat the rules as a bargaining chip. “Tech legislation and tariffs are two distinct matters and should remain such,” said Bulgarian conservative lawmaker Eva Maydell. — Pieter Haeck WINES AND SPIRITS Wines and spirits won’t be exempted from tariffs, even though the European Union pushed hard to obtain relief for a sector that has been caught in the crossfire from both Washington and Beijing. This means they will be subject to a 15 percent U.S. tariff.  That’s a blow for European exporters, who long benefited from tariff-free access on most spirits until successive trade wars tore it up. Wines and spirits won’t be exempted from tariffs, even though the European Union pushed hard to obtain relief for a sector that has been caught in the crossfire from both Washington and Beijing. | Guillaume Horcajuelo/EPA Šefčovič admitted that the talks had fallen short — but insisted the fight isn’t over.  “The tariffs on wine and spirits was one of the very important offensive interests of the European Union. Unfortunately, here we didn’t succeed … but the doors are not closed forever,” he told reporters.  — Bartosz Brzeziński GREEN RULES  The EU made a vague promise to address U.S. concerns regarding EU laws on mandatory sustainability reporting (the Corporate Sustainability Reporting Directive), supply chain oversight (the Corporate Sustainability Due Diligence Directive) and deforestation (the EU Deforestation Regulation). Brussels mainly pitched ideas it already wants to implement, however.   The EU will ensure its rules “do not pose undue restrictions on transatlantic trade” by reducing the administrative burden on businesses in the CSDDD and by proposing changes to the EU’s civil liability regime, which holds companies legally accountable for human rights violations and environmental damage in their supply chains.   Scrapping the EU’s liability regime is already a major point in the Commission’s omnibus proposal announced last February, which rolls back many features of the CSRD and CSDDD among other files.  Crucially, those changes have not yet received the official green light from EU countries or lawmakers.   On deforestation, the EU says it recognizes that U.S. commodities production “poses negligible risk to global deforestation,” having already labeled the country as “low risk” in its classification system last May.  — Marianne Gros AVIATION Washington commits to exempting aircraft and parts from higher tariffs, applying its very low most favored nation duties to the industry. Irish lobbyists are breathing a collective sigh of relief. A trade war slapping American tariffs on Airbus and European tariffs on Boeing would have hit the industry’s key middleman, Dublin, particularly hard. The Irish capital is the world’s biggest hub for aircraft leasing with an ecosystem of lessors and financial advisers overseeing most of the world’s leased aircraft. Ireland’s Central Statistics Office values that Irish-managed fleet at €268 billion.  Small wonder, then, that Prime Minister Micheál Martin singled out aviation when welcoming the newly published details of the EU-U.S. agreement. “Given the significance of the airline sector to Ireland, a specific carve-out for aircraft and aircraft parts is welcome,” he said. — Shawn Pogatchnik DEFENSE  The EU promised to buy more American weapons under Thursday’s trade deal, although a senior official downplayed any impact on efforts to boost Europe’s military industrial complex. The EU “plans to substantially increase procurement of military and defence equipment from the United States, with the support and facilitation of the U.S. government,” the joint statement said.  That could deal a blow to the European defense industry, which Brussels has been trying to strengthen with initiatives like the €150 billion loans-for-weapons Security Action for Europe regulation to boost joint procurement, or the €1.5 billion European Defence Industry Programme still under discussion with the European Parliament. — Jacopo Barigazzi INVESTMENTS Although it’s unclear how exactly it will fulfill its promises, the EU “intends to” procure $750 billion worth of U.S. energy, including liquefied natural gas, oil and nuclear energy products, through 2028.  It will also buy “at least” $40 billion worth of U.S. artificial intelligence chips. Europe already relies heavily on U.S.-based AI chip suppliers such as Nvidia, since it has no own-production capacity in that space.  On top of that, “European companies are expected to invest an additional $600 billion across strategic sectors in the United States through 2028,” the document adds. — Camille Gijs and Pieter Haeck

BRUSSELS — The European Commission will propose deep cuts to the European Union’s environmental reporting rule book in its bid to slash red tape and boost the bloc’s struggling economy, according to a section of a draft of the upcoming omnibus legislation obtained by POLITICO. In one of the first major pieces of legislation from the new Commission, a large cohort of businesses could be exempt from complying with corporate sustainability reporting rules, bringing only the largest companies under the regulations, the leaked document shows. Requirements to monitor environmental and human rights abuses deep in companies’ global supply chains, meanwhile, could be considerably reduced under the proposed changes. The eagerly anticipated proposal will be a relief to many businesses worried about having to meet complicated green reporting standards, many of which they complain are overlapping and require major investment to ensure compliance. But green and center-left groups are likely to oppose many of the changes, setting up a fight in the European Parliament and among member countries. “If confirmed, this is reckless,” Maria van der Heide, head of EU policy at NGO ShareAction, said on Saturday. “Sustainability laws designed to tackle the most pressing crises — climate breakdown, human rights abuses, corporate exploitation — are being crossed out behind closed doors and at record speed. This is not simplification, it’s pure deregulation.” THE DETAILS Expected on Feb. 26, the omnibus bill aims to simplify three of the bloc’s major green rules affecting businesses: the corporate sustainability reporting directive (CSRD), which forces companies to report on their impact on the environment and their exposure to climate risk; the corporate sustainability due diligence directive (CSDDD), which requires them to investigate and address human rights and environmental abuses in their global supply chain abuses; and the EU taxonomy, which defines what counts as a sustainable investment. The bill is also expected to include changes to the carbon border tax, though this was not confirmed in the leaked section of the bill. According to the leaked draft, the Commission suggests making eight changes to the due diligence rules to significantly water them down, including asking businesses only to look at their direct suppliers and not further along their supply chains. Changes to the CSRD, meanwhile, would see the law’s implementation delayed by a year, and would mean only the very largest companies — those with more than 1,000 employees and €450 million in turnover — would have to comply. Under the existing legislation, the rules would have applied to listed companies with as few as 50 employees and annual turnover of €8 million from 2026. If passed, the latter change would mean that the scope of the CSRD and CSDDD would become the same, something which businesses and member countries have been asking for. POLITICO reported on Friday that an earlier draft of the omnibus had included scrapping the so-called “double materiality” rule in the CSRD, which requires companies to report on their impact on the environment, not just the risks climate change poses to their financial health, as in more traditional sustainability reporting standards. The leaked section of the draft bill makes no mention of double materiality, however. Once out, the proposed amendments will require approval from member countries in the Council of the EU and from lawmakers in the European Parliament. DUE DILIGENCE SLASHED The original due diligence law — passed in 2024 and only due to be implemented incrementally from 2027 onwards — requires companies to look deep into their supply chains to identify and act on activities that harm the environment and violate human rights. Under the new proposed rules, those duties would be radically reduced. Companies would no longer have to look beyond suppliers with which they have a direct business relationship. The frequency at which they are expected to monitor suppliers would be reduce to once every five years, down from annually. This would “significantly reduce burdens not just for in-scope companies but also for their business partners, often SMEs, which risk being at the receiving end of (detailed) information requests as part of these monitoring exercises,” the text states. In addition, companies would no longer be forced to terminate that relationship with suppliers that fail to improve their behavior. The Commission also wants to scrap the current EU-wide liability regime, in order to “reduce litigation risk” for businesses. That would mean that holding companies liable for breaches under the CSDDD would only exist under national laws. The proposed changes also limit the scope of the term “stakeholder,” reducing the number of people and communities businesses must consider when conducting their due diligence. The draft also softens the original requirement for companies to put into force a climate change transition plan. The text also amends rules on how member countries should fine non-compliant companies, removing a requirement from the existing rule that the fine be linked to a company’s turnover.