Why Europe’s car industry is at the centre of a new US trade war
Summary
President Donald Trump announced plans to raise U.S. tariffs on cars and trucks made in the European Union from 15% to 25%, claiming the EU has not fully followed their trade deal made in July 2025. The European Commission denies these claims, and so far no new tariffs have been applied. The trade deal included limits on tariffs and EU promises to buy more U.S. goods and military equipment.Key Facts
- In July 2025, the U.S. and EU agreed on a trade deal capping tariffs on most EU goods, including cars, at 15%.
- President Trump says the EU is not fully following this trade deal, which he uses to justify raising tariffs to 25%.
- Vehicles made in the U.S. by EU companies would not face the increased tariffs.
- The European Commission rejects Trump’s claim that the EU is not complying with the trade deal.
- The EU agreed to spend hundreds of billions of dollars on U.S. energy, investments, and military equipment as part of the deal.
- The EU has a large trade surplus with the U.S., even after some tariffs were put in place.
- The trade deal has not been fully implemented, partly due to political issues and a U.S. Supreme Court ruling against some global tariffs.
- Trump used an executive order to impose and then raise tariffs to 15% on all countries, including the EU, under U.S. trade law.
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