EU Trade Agreement Tariffs: France Faces Challenges in Luxury and Agri-food Sectors

On July 27, 2025, the United States and the European Union concluded a trade agreement, setting tariffs on EU exports to the US at 15%, down from an initially proposed 30%. This agreement is set to have uneven impacts across EU member states, primarily affecting Germany, which exported $161.2 billion to the US in 2024, making it the most exposed country under the new tariffs.

While France is less exposed than Germany, it will still face significant challenges in sectors such as luxury goods and agri-food. The new tariffs are expected to lead to increased costs for French exports, particularly as American consumers have a preference for French products. The luxury sector, represented by conglomerates like LVMH, believes they can manage the 15% tariff by adjusting prices and production strategies to mitigate losses.

Overall, 20.6% of EU exports are directed to the US, amounting to a trade surplus of $235.6 billion for the EU, with Ireland having the largest surplus at $86.7 billion. Germany's dependence on exports means that these new tariffs could pose significant risks to its GDP, with forecasts suggesting a potential decline by 1%. Italy also remains significantly impacted, alongside France. As the EU navigates these changes, member states will need to adapt rapidly to maintain their competitiveness in the US market.