US to impose 25% tariffs on EU luxury car imports starting soon

US Imposes 25% Tariffs on EU’s Auto Sector Amid Dispute Over Trade Deal

The United States is set to impose tariffs of up to 25% on the European Union’s auto sector, reversing an agreement reached in August between Washington and the bloc. US Trade Representative Jamieson Greer confirmed that the White House will proceed with this action.

In August, the US and EU agreed to lower tariffs on global automotive imports from 15% to 10%. However, the US Supreme Court ruled earlier this year that President Donald Trump could not impose his global tariffs through the International Emergency Economic Powers Act (IEEPA). Despite this ruling, Trump imposed a 25% tariff on global automotive imports under Section 232 in 2020.

The dispute centers around EU compliance with the August agreement. The US claims that the bloc failed to implement the deal at the EU level, which led to some delays in implementation. European officials have rejected these allegations.

The tariffs will primarily affect higher-end and luxury vehicles, as well as those imported as finished items. German car companies, including Volkswagen, BMW, and Mercedes-Benz, are expected to be hardest hit due to their significant presence in the US market.

According to the European Automobile Manufacturers’ Association (ACEA), car trade accounts for 8% of EU-US business, with the US being the number one destination for EU-built cars. The USMCA-related incentives have led to a shift towards producing mid-level cars in the US.

The companies involved are reviewing the recent tariff action and waiting for additional details. Volkswagen operates major production facilities in Chattanooga, Tennessee, while Mercedes-Benz produces SUV models at a plant in Alabama. BMW builds its X series SUVs at a facility in Spartanburg, South Carolina.

Source: Al Jazeera