Trump threatens 25% tariffs on EU cars, says bloc breached trade deal

Donald Trump said he would raise tariffs on cars and trucks from the European Union to 25% next week, escalating pressure on a trade relationship that Washington and Brussels had framed as stabilized less than a year ago. He said the bloc “is not complying with our fully agreed to trade deal” and added that “It is fully understood and agreed that, if they produce Cars and Trucks in U.S.A. Plants, there will be NO TARIFF.”

A 25% duty would ripple quickly through the consumer chain. Imported EU vehicles would face a larger tax at the border, which typically feeds into higher sticker prices, tighter dealer inventories and tougher pricing decisions for automakers already balancing supply, demand and financing costs. Vehicles assembled in U.S. plants by European brands would get a relative advantage, reinforcing the pressure to shift production and sourcing toward the American market.

The threat landed in direct tension with the July 27, 2025 agreement Trump and European Commission President Ursula von der Leyen reached in Turnberry, Scotland. That deal set a 15% tariff ceiling on most EU exports, including cars, and was sold by the Commission as a way to restore stability and predictability in transatlantic trade. Reuters said the framework was designed to avert a broader trade war, while still leaving Trump room to lift tariffs later if investment commitments were not met.

The economic stakes are large. The European Commission says EU-U.S. trade in goods and services reached €1.6 trillion in 2024, with more than €4.2 billion crossing the Atlantic every day. In auto trade alone, the United States was the top destination for EU car exports in 2024, taking €38.9 billion worth of vehicles, according to Eurostat. The European Automobile Manufacturers’ Association said the U.S. accounted for 22% of EU car export value and that about 758,000 EU-made cars worth €38.9 billion were shipped there last year.

German carmakers Volkswagen, Mercedes-Benz and BMW are among the companies most exposed. German Chancellor Friedrich Merz welcomed the 2025 deal because it helped avoid a trade conflict that would have hit Germany’s export-driven economy and auto sector hard. The latest tariff threat revives that risk, along with the possibility of retaliation from Brussels if the dispute widens.

Trump did not say what legal authority he would use for the new increase. CNBC noted that the Supreme Court struck down his reciprocal tariffs earlier this year, while his administration’s separate 25% Section 232 tariffs on vehicles and certain auto parts remain in place. The EU warned in February that the trade arrangement could be jeopardized, and Trump’s latest move turns that warning into a fresh test of whether the deal can still command market confidence.