Europes Car Industry Embroiled in New US Trade Dispute

US President Donald Trump has announced plans to increase tariffs on cars and trucks exported from the European Union to the US, from 15% to 25%. The move comes after Trump accused the EU of not complying with the terms of a trade deal agreed last July. Trump stated that vehicles made in the US by EU companies would be exempt from the levy.

The US and EU reached a wide-ranging trade agreement in July 2025, which capped US tariffs on most EU goods, including cars, at 15%. The EU also committed to spending hundreds of billions of dollars on US weaponry and energy products. Trump had hailed the agreement as the “biggest deal ever made” when it was signed.

The European Commission has rejected Trump’s claim that the EU is not complying with last year’s trade deal. No additional tariffs have come into effect so far, but the move has surprised Brussels. The European Parliament has given conditional approval to the trade deal, and EU lawmakers have strengthened the deal’s safeguards.

The US president had previously set tariffs on steel and aluminium from many countries at 50%, which would not be cut for EU products. Aerospace tariffs remain at zero for now. Trump has made no secret of using tariffs to try to trim US trade deficits, with the US running a $236bn goods deficit with the EU in 2024.

The latest move comes as transatlantic ties have been strained, with the EU’s refusal to join Washington’s current war on Iran being a recent point of contention. The European Commission has stated that the aim was to rebalance a trade surplus with the US.

Source: Al Jazeera