President Trump announced plans to increase tariffs on European Union cars and trucks next week, citing non-compliance with a previous trade deal. The earlier agreement capped US tariffs at 15%, lower than the current 25% imposed on other trading partners. Despite a Supreme Court ruling invalidating some of Trump’s global levies, this tariff hike remains unaffected.
Trump stated that the increase to 25% would take effect next week without specifying how the EU is failing to meet the trade deal terms or providing further reasons for the planned increase. This announcement follows his recent criticism of German Chancellor Friedrich Merz, urging him to focus on ending the Ukraine war rather than interfering with Iran.
Germany’s automotive sector could be significantly impacted by this tariff hike, as it accounts for a substantial portion of EU auto exports. The European Parliament approved the trade pact with conditions, requiring further negotiations before implementation. In April, EU Trade Chief Maros Sefcovic met with US counterparts to discuss easing the effects of US steel tariffs and improving relations.
The United States is the second-largest market for new EU vehicle exports after the UK, accounting for nearly 20% of EU car exports annually. Germany alone exported approximately 450,000 vehicles to the US in 2024, according to the VDA industry group.