US hikes tariff on EU automobiles to 25% over alleged trade deal breach

United States President, Donald Trump, has announced a fresh 25 per cent tariff on cars and trucks imported from the European Union (EU), citing the bloc’s alleged failure to comply with an existing trade agreement.

Trump disclosed the decision on Friday via a post on Truth Social, stating that the new tariff regime would take effect next week, although no specific date was given.

According to him, the move became necessary due to what he described as the EU’s non-compliance with the terms of a “fully agreed” trade deal between both parties.

“I am pleased to announce that, based on the fact that the European Union is not complying with our fully agreed trade deal, next week I will be increasing tariffs charged on cars and trucks coming into the United States,” he said.

He added that the new tariff would be raised to 25 per cent, stressing that vehicles manufactured within the United States would be exempted.

“It is fully understood that if such vehicles are produced in US plants, there will be no tariff,” Trump noted, while highlighting ongoing investments in America’s auto sector.

The president further revealed that automobile and truck manufacturing plants worth about $100 billion are currently under construction across the country, describing it as a record level of investment in the industry.

“These plants, staffed by American workers, will soon commence operations. There has never been anything like what is happening in America today,” he added.

The development is expected to have significant implications for the European automotive industry, which plays a critical role in the region’s economy. The sector accounts for about 13 million jobs and contributes roughly seven per cent to the EU’s Gross Domestic Product (GDP).

Data from 2023 shows that European automakers exported vehicles and components valued at €56 billion to the United States, representing about 20 per cent of the bloc’s total automotive exports.

With the US being the largest export destination for EU-manufactured vehicles, the new tariff is likely to increase costs and reduce the competitiveness of European cars in the American market.

Recall that the Trump administration had previously imposed a 25 per cent tariff on global automotive imports under a national security provision. However, a subsequent agreement between the US and the EU reduced the effective rate to 15 per cent, alongside concessions on industrial goods and regulatory standards.

Under that deal, the EU agreed to remove duties on US industrial products, including automobiles, and align with American safety and emissions standards.

Despite initial resistance within Europe, leaders accepted the agreement as a safeguard against further tariff increases. However, reports indicate that implementation of the deal has been slow, a development that may have triggered the latest action by Washington.