The United States and the European Union have signed a new trade agreement that will impose a 15% tariff on most EU-manufactured goods entering the U.S.—but with key exemptions, including semiconductor manufacturing equipment. The zero-tariff provision means critical tools produced by European suppliers like ASML will remain exempt, preserving cost advantages for chipmakers operating in the U.S.

The European Commission confirmed in a statement that both sides agreed to “zero-for-zero tariffs on a number of strategic products,” such as aircraft components, select chemicals, generic drugs, semiconductor equipment, agricultural goods, and critical raw materials. The move is expected to benefit companies like Intel, TSMC, Samsung, GlobalFoundries, and Texas Instruments, which rely heavily on ASML's advanced lithography systems for their U.S. fabs.

Without the exemption, a 15% tariff on ASML's tools would have significantly increased the cost of advanced chip production. For example, the average price of ASML's advanced DUV immersion tool is around $89.6 million, while its EUV system starts at $265 million. A 15% duty would raise those costs to over $103 million and $305 million respectively—adding hundreds of millions of dollars to the total cost of building and equipping U.S. fabs.

The tariff exemption comes as the U.S. dollar has already weakened against the euro, making EU-manufactured tools more expensive for American buyers. Without this exemption, further cost increases could have discouraged investment in U.S. chip manufacturing, reduced profit margins, or driven companies to move advanced production back to Asia. The deal preserves the competitiveness of domestic chip fabrication at a critical time of industry expansion.

In contrast, the U.S. is preparing to raise tariffs on Japanese semiconductors and pharmaceuticals to 15% under a separate trade arrangement. Japanese government officials confirmed that semiconductor duties will rise as part of a broader “reciprocal tariff” deal finalized earlier this month, which also raised automotive tariffs between the two nations.

While the U.S.-Japan agreement includes a clause promising that Japan will not face harsher treatment than other countries, it does not specify exact rates. However, with the U.S. already confirming a 15% tariff on semiconductors and pharmaceuticals in its EU deal, Japanese exports of these products are expected to face the same rate.

The divergence in treatment highlights the Biden administration's evolving trade strategy—using tariffs to bolster domestic supply chains in strategically sensitive sectors like semiconductors, while selectively offering relief to allies willing to make reciprocal economic commitments.