Trump Raises EU Auto Tariffs to 25%

President Donald Trump announced on Friday that he will increase tariffs on cars and trucks imported from the European Union to 25%, citing non-compliance with a trade deal agreed upon last year. The current tariff rate is 15% under a deal negotiated in July, which was seen as a reprieve for the EU from higher tariffs Trump had previously threatened.

The announcement comes amid stalled talks over how to move forward on last summer's deal, with disputes centering around steel and aluminum tariffs. European officials have pointed to political problems in Europe and disagreements over the future of Greenland as reasons for the delay in ratifying the deal.

Trump's decision marks a sharp escalation in trade tensions between Washington and Brussels. Cars are a vital industry for Europe, making them a particularly sensitive target for Trump. The president urged European carmakers to shift production to the US, stating that vehicles produced in U.S. plants would be exempt from the new tariffs.

The EU has been approached for a response, but no official statement has been released yet. The trade deal agreed upon at Trump's Turnberry golf course in Scotland set levies on most European goods at 15%. In exchange, Europe agreed to invest in the US and make changes expected to boost US exports.

The Supreme Court ruled earlier this year that a large part of Trump's tariff agenda was illegal. However, the tariffs affecting cars fall under a different legal process and are not impacted by the Supreme Court ruling. European automakers like Mercedes, BMW, and Volkswagen could be significantly impacted by the change in tariff rate.

The president of Germany's VDA auto association urged the U.S. and European Union to engage in swift talks and honor their existing trade agreement after President Donald Trump announced a tariff hike on cars from the EU on Friday. VDA President Hildegard Mueller said the cost of additional tariffs would be enormous and would likely impact consumers in the United States as well.

Carmakers, the largest industrial sector in Germany, are already grappling with weak demand in Europe, a shift to EVs, and fierce competition from China. The Trump administration last year imposed a 25% tariff on global automotive imports but struck a deal in Turnberry, Scotland, with the EU to lower those duties to a net 15%. In exchange, the EU agreed to eliminate duties on U.S. industrial goods, including autos, and accept U.S. safety and emissions standards on vehicles.

Although EU lawmakers advanced legislation in March to implement the tariff reductions, the process is not expected to be completed before June, as EU governments and the European Parliament negotiate final texts. In a separate statement, Sigrid de Vries, Director General of the European car lobby ACEA, urged European legislators to conclude negotiations as swiftly as possible.