US President Donald Trump on Friday said he will increase a 25% tariff on cars and trucks from the EU next week, accusing the bloc of not complying with trade deal. However, he said that the vehicles assembled at American plants would be exempt from the higher duties. In a post on Truth Social, Trump announced the move as both a corrective measure and an incentive for manufacturers to expand production in the United States.
Here's what Trump said on 25% tariff on EU
Donald Trump said, “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%. It is fully understood and agreed that, if they produce Cars and Trucks in U.S.A. Plants, there will be NO TARIFF. 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. These Plants, staffed with American Workers, will be opening soon — There has never been anything like what is happening in America today!”
Notably, the proposed hike marks a sharp escalation in trade tensions, with Donald Trump arguing that the move is necessary to address what he described as non-compliance by the EU.
Trump point to a surge in domestic investment
Furthermore, the US President pointed to a surge in domestic investment, claiming that more than $100 billion is being committed to new automobile and truck manufacturing facilities across the country. He also described the scale of planned expansion as unprecedented, with multiple plants under construction and expected to come online in the near term, employing American workers.
"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. These Plants, staffed with American Workers, will be opening soon - There has never been anything like what is happening in America today! Thank you for your attention to this matter," he added in his post.
Trump and European Commission had agreed to trade deal last July
Trump and European Commission President Ursula von der Leyen had agreed to the trade deal last July. It set a 15% tariff on most goods. Both the US and the EU had previously confirmed their commitment to preserving the trade framework, known as the Turnberry Agreement, which was named after Trump's golf course in Scotland.
But the status of the 2025 deal was first cast into doubt after the Supreme Court this year ruled that the Republican president lacked the legal authority to declare an economic emergency and charge tariffs on EU goods.
The initial agreement had been a tariff ceiling of 15% on goods from the EU, but the Supreme Court ruling reduced that to 10% as the Trump administration launched a new set of import taxes based on other laws. The Trump administration is in the middle of investigations on trade imbalances and national security risks to impose a new tariff regime, which could ultimately put the agreement with the EU in risk of violation. The EU had said it expected the bilateral deal would save European automakers about 500 million to 600 million euros (USD585 million to USD700 million) a month.
The value of EU-U.S. trade in goods and services amounted to 1.7 trillion euros (USD2 trillion) in 2024, or an average of 4.6 billion euros a day, according to EU statistics agency Eurostat.
"A deal is a deal," the European Commission said in February after the Supreme Court ruling. "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."
Also Read:
India-EU trade deal: What gets cheaper for Indian consumers and why the deal matters?
