EU-Australia trade agreement signed/ Union will save 1 billion euros per year in duties
European Commission President Ursula von der Leyen signed a free trade agreement with Australian Prime Minister Anthony Albanese on Tuesday, cutting tariffs on most EU goods and agricultural exports. The deal marks another victory for Brussels as it rushes to diversify trade ties and secure strategic partners amid rising global tensions.
The pact will save the EU €1 billion a year in duties, with exports expected to increase by up to 33% over the next decade. Tariffs will fall to zero on products including cheese (over three years), wine, some fruit and vegetables, chocolate and processed foods. On the more difficult issues, such as beef and sheepmeat, which stalled talks in 2023, Australia agreed to quotas of 30,600 and 25,000 tonnes a year, respectively.
A mechanism will allow the EU to protect sensitive sectors if a surge in Australian imports damages the bloc's market. Beyond agriculture, the deal opens up access to Australia's critical raw materials, including aluminum, lithium and manganese. Brussels also failed to scrap Australia's luxury car tax. Instead, 75% of EU electric vehicles will be exempt.
The commission expects strong export growth in key sectors, including milk (up 48%), motor vehicles (52%) and chemicals (20%). Brussels has prioritised the deal as it builds partnerships in the Indo-Pacific, where China's influence has become central. A security and defence partnership with Canberra was also announced on Tuesday.
"The EU and Australia may be geographically far apart, but we couldn't be closer in terms of how we see the world," von der Leyen said, adding: "With these dynamic new partnerships in security and defence, as well as in trade, we are coming even closer to each other."
Since Donald Trump returned to power in 2025, trade deals have taken on a sharper geostrategic weight for the EU as it seeks new markets. In 2025, Brussels reached agreements with Mexico, Switzerland and Indonesia. The Mercosur pact was also signed earlier this year and will apply provisionally from May 1, despite a legal challenge in the European Parliament.
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