President Donald Trump announced Friday that the United States will raise tariffs on cars and trucks imported from the European Union to 25% starting next week, citing the EU’s failure to comply with a 2025 bilateral trade framework.
"I am pleased to announce that, based on the fact the European Union is not complying with our fully agreed to Trade Deal, next week I will be increasing Tariffs charged to the European Union for Cars and Trucks coming into the United States. The Tariff will be increased to 25%. It is fully understood and agreed that, if they produce Cars and Trucks in U.S.A. Plants, there will be NO TARIFF.”
Trump highlighted over $100 billion in ongoing U.S. auto manufacturing investments - a record, he said - and praised American workers staffing new plants set to open soon.
This sent Emini S&P futures cascading lower:
The move reverses a temporary reduction under the July 2025 U.S.-EU Framework Agreement on Reciprocal, Fair, and Balanced Trade. That deal, reached after Trump initially imposed broad 25% Section 232 national-security tariffs on automobiles and parts in March 2025, lowered the rate on most EU vehicles and parts to 15% (retroactive to August 1, 2025) in exchange for EU commitments. These included cutting tariffs on U.S. industrial and agricultural goods, purchasing hundreds of billions in American energy, and increasing investment in the U.S.
EU implementation has lagged. The European Parliament conditionally approved enabling legislation in late March 2026 with multiple “safeguard” clauses - including a “sunrise” provision tying EU concessions to verified U.S. compliance, a suspension mechanism for new U.S. tariffs, and a sunset date in 2028. Tensions have simmered over non-tariff issues as well. In April 2026, U.S. automakers (GM, Ford, and Stellantis) warned that proposed EU safety and emissions standards could effectively block large U.S.-built pickup trucks and vans from the European market, a step they called inconsistent with the deal’s spirit of mutual recognition.
Ferrari also RACE'd lower on the news, one day after Vanguard added to their position.
The original 2025 auto tariffs were justified on national-security grounds and aimed at spurring domestic production; the administration has repeatedly offered exemptions or lower rates to allies that negotiate deals or shift manufacturing stateside. Trump’s post explicitly ties the new 25% levy to onshoring: EU brands that build in the United States face zero additional tariff.
The announcement comes amid broader Trump administration tariff actions that have reshaped global auto supply chains since January of last year. European manufacturers such as BMW, Mercedes-Benz, Volkswagen, and Stellantis have already faced pressure from the earlier duties, prompting some to accelerate U.S. investment plans or adjust pricing. Industry analysts warn that a return to 25% could raise costs for consumers, disrupt transatlantic supply chains, and invite EU retaliation.
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