International
-Gaurav Sharma
The White House plans to sharply escalate a trade dispute with the European Union, with US President Donald Trump announcing that tariffs on EU cars and trucks entering the United States will rise to 25 per cent next week, putting the future of an already fragile transatlantic trade framework back under strain.
The move targets one of Europe’s most important export sectors and comes after Washington accused Brussels of failing to follow the terms of an earlier trade understanding. European manufacturers, which already ship large volumes of vehicles to the American market, now face higher costs and fresh uncertainty over long-term access.
US President Trump announced plans to raise tariffs on EU cars and trucks to 25% next week, escalating a trade dispute over alleged EU non-compliance and straining the transatlantic trade framework.
US-EU tariffs on cars and trucks linked to Turnberry Agreement and court ruling
US-EU tariffs on cars and trucks had been governed by the Turnberry Agreement, named after Trump’s golf course in Scotland, which set a 15 per cent ceiling on EU goods. That framework was shaken when the US Supreme Court ruled earlier this year that Trump lacked legal authority to declare an economic emergency and unilaterally impose tariffs on EU products.
After that judgment, the maximum rate on EU imports dropped to 10 per cent, while the Trump administration started using other legal tools to roll out new import charges. Officials are now running inquiries into trade imbalances and national security concerns, which could justify a wider tariff system and further challenge the US-EU agreement covering cars and trucks.
US-EU tariffs on cars and trucks draw EU criticism and highlight trade exposure
The European Commission stressed that US-EU tariffs on cars and trucks must respect previous commitments. AP quoted the Commission as saying in February: “A deal is a deal. As the United States’ largest trading partner, the EU expects the U.S. to honor its commitments set out in the Joint Statement — just as the EU stands by its commitments. EU products must continue to benefit from the most competitive treatment, with no increases in tariffs beyond the clear and all-inclusive ceiling previously agreed.”
The European Union had earlier calculated that the bilateral arrangement would save European carmakers about 500 million to 600 million euros, or roughly $585 million to $700 million, each month. Data from Eurostat show that EU-US trade in goods and services reached 1.7 trillion euros, or about $2 trillion, in 2024, averaging 4.6 billion euros daily.
| Item | Figure |
|---|---|
| Previous EU tariff ceiling under Turnberry Agreement | 15% |
| Post-ruling effective tariff ceiling | 10% |
| New US tariff on EU cars and trucks | 25% |
| Estimated EU automaker savings under earlier deal | 500–600 million euros per month |
| Total EU-US trade in 2024 | 1.7 trillion euros |
Trump set out the latest step in a series of posts on Truth Social. Trump wrote: “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%,” he added.
Trump also drew a clear line between imported vehicles and those built domestically, stating: “It is fully understood and agreed that, if they produce Cars and Trucks in U.S.A. Plants, there will be NO TARIFF.” Trump claimed the policy was already spurring investment, saying: “Many Automobile and Truck Plants are currently under construction, with over 100 Billion Dollars being invested, A RECORD in the History of Car and Truck Manufacturing,” and continued, “These Plants, staffed with American Workers, will be opening soon–There has never been anything like what is happening in America today!”
The planned rise in US-EU tariffs on cars and trucks places extra pressure on an economic relationship that both sides had recently pledged to support through the Turnberry framework. With legal disputes unresolved, new investigations under way in Washington, and the European Union insisting that “a deal is a deal”, trade relations risk further friction, especially for the large vehicle trade that links the two economies.
