Final week, US President Donald Trump introduced to hike tariffs on automobiles and vehicles manufactured within the European Union from 15 p.c to 25 p.c after accusing the bloc of taking too lengthy to adjust to the phrases of the commerce deal agreed final July.
Trump’s newest commerce barb comes because the transatlantic ties have been strained, with the newest friction level emanating from the EU’s refusal to affix Washington’s present conflict on Iran.
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“I’m happy to announce that, primarily based on the actual fact the European Union shouldn’t be complying with our full agreed to Commerce Deal, subsequent week I will likely be growing Tariffs charged to the European Union for Automobiles and Vehicles coming into america,” Trump wrote, with out offering any proof for his declare.
The US president, nonetheless, mentioned that autos made within the US by EU firms could be exempted from the levy.
To this point, no extra tariffs have come into impact, however the transfer has stunned Brussels, with the European Fee rejecting Trump’s declare that the EU was not complying with final 12 months’s commerce deal.
So, how important is Trump’s menace, and the way will the EU reply?
Right here’s what we all know:
What’s the present commerce deal between the EU and US?
In July 2025, the US and the EU reached a wide-ranging commerce settlement, capping US tariffs on most EU items, together with automobiles, at 15 p.c after months of standoff. The EU additionally agreed to spend tons of of billions of {dollars} on US weaponry and vitality merchandise, on high of current expenditures.
Talking to reporters at his Turnberry golf resort in Scotland after signing the deal, Trump had hailed the settlement because the “largest deal ever made”.
Trump mentioned that the EU could be “opening up their nations at zero tariff” for US exports, however added that US levies on metal and aluminium, which he had set at 50 p.c on many nations, wouldn’t be minimize for EU merchandise. Aerospace tariffs would stay at zero for now, he mentioned.
The US president mentioned that the EU would spend an additional $750bn on US vitality merchandise, make investments $600bn within the US and purchase navy tools price “tons of of billions of {dollars}”.
European Fee President Ursula von der Leyen had mentioned the settlement would “convey stability” and “convey predictability that’s essential for our companies on each side of the Atlantic”. Von der Leyen had additionally defended the deal, saying the purpose was to rebalance a commerce surplus with the US. Trump has made no secret of utilizing tariffs to attempt to trim US commerce deficits.
In 2024, the US ran a $236bn items deficit with the EU. Final 12 months, regardless of tariffs being introduced, the products commerce surplus continued.
According to Eurostat, the statistics division of the European Fee, “Within the third quarter of 2025, the EU registered a 40.8 billion euro ($47.7bn) commerce in items surplus with america. This was a 49.7 p.c decline in contrast with the 81.2 billion euros ($95bn) commerce surplus within the first quarter of 2025”.
Prescribed drugs, automobile components and industrial chemical compounds had been amongst Europe’s largest exports to the US, in accordance with EU knowledge.
The July commerce deal has but to be carried out. In January, EU lawmakers initially paused its ratification after Trump threatened to annex Greenland, an autonomous territory of Denmark.
Then, in February, the US Supreme Court docket declared Trump’s sweeping world tariffs illegal, placing the way forward for Washington’s commerce offers with each nation in limbo.
Trump, nonetheless, instantly signed an government order underneath Part 122 of the US Commerce Act of 1974 to impose a blanket 10 p.c tariff on all nations the US trades with, beginning on February 24. Later, he raised the tariff to fifteen p.c, the very best charge allowed underneath this commerce regulation.
The EU is now going through a 25 p.c tariff on automobiles and vehicles along with the general 15 p.c tariffs.
The European Parliament has given conditional approval to the commerce deal. EU lawmakers have additionally strengthened the deal’s safeguards by together with a provision to droop the settlement if the US imposes extra tariffs above 15 p.c or introduces new tax levies. EU member states are but to agree on the parliament’s proposals.
On Wednesday, representatives of the European Parliament and the European Council, the physique representing EU governments, will resume negotiations on the matter. EU member nations should agree on the European Parliament’s really useful safeguards earlier than the deal is carried out.
EU members largely need a fast settlement between Parliament and Council on implementing the bloc’s aspect of the deal, diplomats informed the Reuters information company.
German Chancellor Friedrich Merz, whose nation is prone to be hit hardest by a automobile tariff improve, informed broadcaster ARD: “The People have it finalised, and the Europeans haven’t – and that’s why I hope we are able to attain an settlement as rapidly as attainable.”
How important are the brand new tariffs? Are they authorized?
Shantanu Singh and Vikram Naik, two India-based worldwide commerce attorneys, famous that previous to the EU-US commerce deal, automobiles and automobile components confronted US import tariffs of as much as 27.5 p.c. The deal struck in July established a tariff ceiling, decreasing them to fifteen p.c, making the automobile sector one among its largest beneficiaries.
“So, the specter of reversing these tariffs to 25 p.c turn out to be fairly important commercially. On the similar time, the menace is politically important to US commerce companions with offers. They will now see that there isn’t any room for authorized arguments or dispute settlement, and these offers could be rendered meaningless on account of perceived non-compliance,” they informed Al Jazeera in a joint response.
Peter Chase, senior fellow specializing in the transatlantic financial system on the German Marshall Fund of america’s Brussels workplace, mentioned Trump’s announcement reportedly stems from his impatience with the EU’s prolonged procedures to implement the US-EU commerce “deal” agreed final 12 months, the so-called “Turnberry Accord.”
“We will be unable to gauge the importance of the president’s menace, made on social media, till it’s finalised in an Government Order issued by the White Home,” Chase informed Al Jazeera.
“However typically, though the EU sells almost $40bn in completed automobiles and vehicles to america annually, new tariffs as such won’t have a lot impact on commerce flows – that will depend on whether or not American customers need to proceed shopping for the automobiles, whatever the extra tax the president is imposing on them,” he mentioned.
Chase famous that Trump has additionally imposed tariffs on automobiles imported from different nations, in addition to on imported automobile components and elements, which in flip impacts the large manufacturing operations European – in addition to US and different – firms have in america.
“All this complicates the aggressive panorama within the US auto market … in order that American customers will in all probability not pay an excessive amount of consideration to this latest transfer,” he added.
Whereas the legality of those extra tariffs within the US stays unclear, Camille Reverdy, an affiliate fellow at Brussels-based assume tank Bruegel, mentioned that the US can justify such tariffs underneath Part 232 of the Commerce Growth Act, because the US Division of Commerce reported that imports of different automobiles and automobile components posed a menace to US nationwide safety.
“Nevertheless, current US Supreme Court docket rulings weakened the authorized robustness of this justification. From a global regulation perspective, the EU argues that the menace violates current commerce agreements and should problem the measure by means of the WTO [World Trade Organisation],” she added.
What’s EU’s automobile commerce with the US like?
Based on a January report by Automotive Gross sales Statistics, the biggest gentle automobile manufacturing teams within the US in 2025 had been GM, Toyota, Ford, Honda, and the FCA (Stellantis) teams. The most effective-selling automobile manufacturers had been Toyota, Ford, Chevrolet, and Honda.
The report additionally famous that, amongst these automobile manufacturers in 2025, US light-vehicle gross sales totalled 16.3 million, with German manufacturers like Volkswagen, BMW, Mercedes-Benz, Audi, and Porsche accounting for roughly 1.2 million – about 7.5 p.c market share.
German Member of the European Parliament Bernd Lange informed Euronews on Monday that Trump’s new tariff menace seems to primarily goal Germany.
“There aren’t any authorized or no financial causes for these tariffs. That is actually politically in opposition to Germany,” Lange mentioned. “He’s focusing on particularly German automobile producers.”
The European lawmaker’s remarks got here simply days after German Chancellor Friedrich Merz criticised the US conflict in Iran, following which Trump introduced the withdrawal of 5,000 US troops from the nation.
President Trump has additionally typically complained about an imbalance within the automobile commerce, saying the EU doesn’t import sufficient US-made automobiles.
Based on The European Car Producers Affiliation (ACEA), the principle lobbying and requirements group of the automobile trade within the EU, the US stays the second largest marketplace for new EU automobile exports after the UK. “When it comes to worth, the US accounted for 18.4 p.c of the EU export market in 2025, down from 21.9 p.c in 2024, a Could 4 report from the foyer mentioned.
Reverdy from the Brussels-based assume tank mentioned that Germany depends on exports and is prone to be essentially the most impacted EU nation, given its sturdy dependence on exports.
“Different main European producers, reminiscent of France and Italy, may even doubtless be impacted however to a lesser extent as their automotive sectors are much less reliant on the US market,” she added.
“Past the direct impression on last automobile exports, the menace would additionally impression European nations in earlier manufacturing phases. For example, Slovakia, Czech Republic, and Hungary are extremely export-oriented and deeply embedded in European/German automobile provide chains, making them weak to a contraction in exterior demand,” she mentioned.
How will the EU reply?
On Monday, European Fee spokesperson Thomas Regnier informed reporters that it isn’t the primary time the EU has skilled such threats. “We stay very calm, targeted on imposing the joint assertion within the pursuits of our firms, of our residents,” he mentioned.
Whereas European Commissioner for Commerce Maros Sefcovic is scheduled to fulfill his US counterpart Jamieson Greer on Tuesday earlier than a G7 commerce ministers’ assembly in Paris to debate the tariffs, the EU’s vehicle trade foyer ACEA has additionally urged the European Parliament and the Council to seek out widespread floor and finish the commerce negotiations in a swift and profitable method.
“Trump has some grounds for being aggravated on the EU’s lack of implementing the commerce settlement, however that mentioned, EU politicians argue that they entered into the deal underneath duress and so they rightly query whether or not the US intends to stay to its personal dedication … since this entire dispute started when the US unilaterally raised tariffs on EU merchandise within the first place,” Chase mentioned.
“The EU will proceed to speak to america, however it ought to be cautious about getting into into new commitments,” he added.
Reverdy mentioned the EU additionally has credible retaliation instruments, together with the imposition of retaliatory tariffs on US items, using commerce defence devices and safeguards measures.
“The EU might additionally pursue dispute settlement on the WTO,” she mentioned.
“Past commerce coverage responses, the EU can be prone to depend on industrial insurance policies measures to assist its automotive trade, and to advertise market diversification exterior of the US.”
