Trump Threatens to Hike EU Auto Tariffs to 25%, Opening New Trade Front with Brussels

Last week, U.S. President Donald Trump declared he would raise import tariffs on cars and trucks made in the European Union (EU) from 15% to 25%, after accusing the bloc of dragging its feet on implementing the terms of a trade agreement reached in July 2025.

The latest move by Mr. Trump comes against a backdrop of already strained Transatlantic relations, with the EU’s refusal to join Washington’s campaign against Iran being a fresh flashpoint.

“I am pleased to announce that, due to the EU’s failure to fully comply with the Trade Deal we agreed on, next week I will increase tariffs on cars and trucks from the EU into the United States,” Mr. Trump wrote on social media, without providing evidence for his claim. However, he added that vehicles produced in the U.S. by EU companies would be exempt from the new tariff.

So far, the additional tariffs have not taken effect, but the move has caught Brussels off guard. The European Commission (EC) rejects the accusation that the EU has not complied with last year's trade deal.

What is the current EU-U.S. trade deal?

In July 2025, the U.S. and the EU reached a comprehensive trade agreement, capping U.S. import duties on most EU goods, including cars, at 15% after months of confrontation. In return, the EU agreed to spend hundreds of billions of dollars on American weapons and energy. Signed at the Turnberry golf course in Scotland, Mr. Trump hailed the deal as “the biggest deal ever.”

Mr. Trump said the EU would allow “duty-free access” for U.S. exports, though the 50% steel and aluminum tariffs he imposed on many countries would not be lifted for the EU. Aerospace tariffs remained at zero. According to Mr. Trump, the EU would spend an additional $750 billion on American energy, invest $600 billion, and purchase “hundreds of billions of dollars” worth of military equipment.

EC President Ursula von der Leyen at the time said the agreement would bring “stability and predictability” to businesses on both sides of the Atlantic. In 2024, the U.S. ran a $236 billion goods trade deficit with the EU. Despite tariffs, the surplus continued in 2025.

According to Eurostat, in the third quarter of 2025, the EU’s goods trade surplus with the U.S. was 40.8 billion euros ($47.7 billion), down 49.7% from 81.2 billion euros ($95 billion) in the first quarter of 2025. Pharmaceuticals, auto parts, and industrial chemicals were the EU’s biggest exports to the U.S.

The July trade deal has not yet been implemented. In January 2026, EU lawmakers paused ratification after Mr. Trump threatened to annex Greenland. In February 2026, the U.S. Supreme Court ruled Mr. Trump’s sweeping tariffs illegal, throwing the future of U.S. trade deals into uncertainty. Mr. Trump immediately signed an executive order imposing a 10% tariff on all countries, later raising it to 15% – the highest rate permitted under U.S. trade law.

The EU now faces a 25% tariff on cars and trucks, on top of the general 15% tariff. The European Parliament has conditionally ratified the deal while strengthening safeguards, including a clause to suspend the agreement if the U.S. imposes tariffs above 15%. EU member states have not yet agreed on the Parliament’s proposal.

Representatives of the Parliament and the European Council (representing governments) will resume talks on Wednesday. German Chancellor Friedrich Merz, whose country would be hardest hit if auto tariffs rise, hopes to reach an agreement as soon as possible.

International trade lawyers in India noted that before the EU-U.S. trade deal, cars and parts faced import duties as high as 27.5%. The July agreement cut them to 15%, making autos one of the biggest beneficiaries. Therefore, threatening to hike tariffs back to 25% is a significant commercial and political move.

Peter Chase of the German Marshall Fund said Mr. Trump’s statement stems from impatience with the lengthy EU procedures to implement the “Turnberry Accord.” He said assessing the seriousness depends on the official executive order from the White House. Although the EU sells nearly $40 billion worth of finished cars and trucks to the U.S. each year, new tariffs might not significantly affect trade flows, depending on U.S. consumer demand. However, tariffs on imported components would affect the production operations of European companies in the U.S.

Legally, Camille Reverdy of Bruegel said the U.S. could justify the measure under Section 232 of the Trade Expansion Act because the U.S. Commerce Department has deemed auto imports a threat to national security. However, recent U.S. Supreme Court rulings have weakened that justification. From international law perspective, the EU considers the threat a violation of existing trade agreements and could file a complaint at the WTO.

Data from January 2026 by Car Sales Statistics shows the largest light-vehicle producing groups in the U.S. in 2025 were GM, Toyota, Ford, Honda, and FCA (Stellantis). Light-vehicle sales in the U.S. reached 16.3 million units. German brands such as Volkswagen, BMW, Mercedes-Benz, Audi, and Porsche held a market share of about 7.5% (1.2 million vehicles).

European Parliament member Bernd Lange said Mr. Trump’s tariff threat appears aimed at Germany, with no legal or economic justification. Mr. Lange said, “He is specifically targeting German automakers.” This remark came days after Chancellor Merz criticized the U.S. war in Iran, and Mr. Trump announced he would withdraw 5,000 U.S. troops from that country.

According to ACEA, the U.S. is the EU’s second-largest export market for new cars after the UK. In 2025, the U.S. accounted for 18.4% of the EU’s export market, down from 21.9% in 2024. Germany is the most export-dependent and vulnerable country. France and Italy are also affected but to a lesser extent. Countries like Slovakia, the Czech Republic, and Hungary – with deep auto supply chain links to Germany – are also vulnerable.

EC spokesperson Thomas Regnier said the EU remains calm, focusing on implementing the deal for the benefit of people and businesses. EU Trade Commissioner Maros Sefcovic is expected to meet U.S. counterpart Jamieson Greer ahead of the G7 trade ministers meeting in Paris. ACEA also urged the European Parliament and Council to quickly find common ground and conclude negotiations.

Peter Chase commented, “Trump has reason to be frustrated by the EU’s slow implementation of the deal, but EU politicians feel they were pushed into the agreement and question whether the U.S. will keep its word, since the whole dispute started with the U.S. unilaterally raising tariffs on EU goods.” He said the EU should be cautious about new commitments.

Camille Reverdy said the EU has credible retaliatory tools, such as imposing retaliatory tariffs on U.S. goods, using trade defense measures, or filing complaints at the WTO. The EU could also rely on industrial policy tools to support its auto industry and diversify markets away from the U.S.