The United States will not reduce its high tariffs on European cars until the European Union introduces legislation to lower its own tariffs on U.S. exports, keeping pressure on the EU’s auto industry.
Although the Trump administration has agreed to cut U.S. tariffs on European cars and car parts from 27.5% to 15%, the specifics were outlined in a framework trade deal published on Thursday.
Donald Trump and European Commission President Ursula von der Leyen announced the agreement on July 27 at Trump’s luxury golf course in Turnberry, Scotland, following an hour-long meeting that capped months of negotiations.
In a joint statement, the U.S. and EU listed their commitments, including the EU’s promise to remove tariffs on all U.S. industrial goods and to grant better market access for a wide range of American seafood and agricultural products.
The U.S. has agreed in principle to apply a 15% tariff on most imports from the EU, covering automobiles, pharmaceuticals, semiconductors, and lumber.
U.S. officials have indicated that the administration could lower its high tariffs on EU autos within weeks, depending on how quickly the bloc formally proposes legislation to reduce its own tariffs on U.S. goods.
“As soon as they introduce that legislation—not necessarily pass or implement it, but just introduce it—we will be able to provide relief,” an unnamed U.S. official told Reuters. “Both sides are very interested in moving quickly.”
However, the joint statement makes it clear that EU carmakers will continue to face 27.5% U.S. tariffs until the EU introduces new laws. U.S. tariffs on EU cars will be lowered “from the first day of the same month in which the European Union’s legislative proposal is introduced,” provided the legislation aligns with the framework agreement and is enacted by the appropriate legislative bodies.
European leaders have expressed some reservations. Last month, French Prime Minister François Bayrou called it “a dark day when an alliance of free peoples, united to affirm their values and defend their interests, resolves to submission.”
Spanish Prime Minister Pedro Sánchez said at a recent news conference, “I support this trade agreement, but I do so without any enthusiasm,” noting that the deal will have limited impact on Spain’s economy due to its smaller trade exposure to the U.S. market.
Reactions from European and U.S. industries on Thursday were mixed. The Spanish Federation of Food and Beverage Industries stated that “an agreement is better than an open trade war,” but added, “We do not accept that exports of our products to the United States should be penalized.”
The Distilled Spirits Council of the United States criticized the deal, warning that 15% tariffs on EU spirits imported to the U.S. could lead to an estimated $1 billion in retail losses and cost 12,000 jobs.
“We are disappointed that this joint statement did not include permanent tariff-free trade for distilled spirits on both sides of the Atlantic,” said Chris Swonger, president and CEO of the Distilled Spirits Council, in a statement.
Reporting contributed by Reuters.
Frequently Asked Questions
Of course Here is a list of FAQs about US tariffs on European cars designed to be clear and helpful for a range of readers
General Beginner Questions
1 What is this about
The US government has decided to keep high taxes on cars imported from the European Union They say this will continue until the EU lowers its own tariffs on goods imported from the United States
2 Why is the US doing this
The US believes that the current trade relationship is unfair They argue that the EU charges higher tariffs on American products than the US charges on European products This is a tactic to pressure the EU into making a new more balanced trade deal
3 What is a tariff
A tariff is a tax that a government adds to goods imported from another country It makes those foreign products more expensive which is meant to protect domestic companies or to be used as leverage in negotiations
4 Which cars are affected
This primarily affects new passenger cars and SUVs imported from EU countries like Germany Italy and the UK Wellknown brands include Volkswagen BMW MercedesBenz Porsche Audi and Jaguar Land Rover
5 Will this make European cars more expensive in the US
Yes most likely To maintain their profit margins car manufacturers often pass the cost of the tariff on to consumers leading to higher sticker prices
Advanced Detailed Questions
6 What specific US goods is the EU taxing highly
The EU maintains higher tariffs on several American products including
Automobiles 10 tariff on US cars
Agricultural Products Such as dairy meat and processed foods
Other Goods Like clothing and footwear
7 What is the current US tariff rate on EU cars
The US has a standard 25 tariff on passenger cars However a key point is the threat of raising it significantly under Section 232 national security laws potentially to 25 The current policy is to maintain the threat of high tariffs as leverage
8 Isnt this just a trade war How does it end
Yes this is a form of trade dispute It ends through negotiation Both sides would need to agree to lower their tariffs simultaneously creating a new trade agreement that they both find acceptable The goal
