US Lifts EU Auto Tariffs to 25%, Scrapping 15% Deal

Donald Trump announced Friday that the United States will raise tariffs on automobiles and trucks imported from the European Union to 25%, effective this week. The administration justified the move by alleging the EU failed to meet commitments under a bilateral trade agreement reached last summer, marking a reversal from the previous 15% rate established under the “Turnberry Agreement.”

The decision follows a period of heightened trade volatility and legal disputes. Although Washington and Brussels agreed in August to reduce automotive tariffs to a net 15%, Trump said on social media that the EU is “not complying with our fully agreed-to trade deal.”

Speaking at the White House, Trump said the tariff increase is intended to accelerate industrial relocation to the United States. “It forces them to move their factory production much faster. We have a trade deal with the European Union. They were not adhering to it, so I raised tariffs on cars and trucks to 25%—that is billions of dollars coming into the United States,” he said.

The Turnberry Framework and Delays

The trade relationship had been governed by the Turnberry Agreement, named after Trump’s Scottish resort, which set a 15% tariff ceiling on most goods. In exchange, the EU committed to eliminating duties on US industrial products and aligning with US safety and emissions standards.

However, implementation has been delayed within EU institutions. While lawmakers advanced the necessary legislation in March, final approval by member states and the European Parliament is not expected until June.

“The US effectively implemented the Turnberry agreement as of August, and nearly a year later we have yet to see the EU cut a single tariff,” said Kelly Ann Shaw, partner, Akin Gump Strauss Hauer & Feld and former trade adviser.

Legal uncertainty has further complicated the framework. Earlier this year, the Supreme Court of the United States ruled that the president lacked authority to invoke an economic emergency to impose certain EU tariffs. The decision temporarily reduced some rates to 10% before the administration launched new investigations to justify revised measures.

European Response and Economic Stakes

The European Commission has rejected the administration’s claims of non-compliance, stating that both sides are expected to uphold the joint declaration.

European officials reacted sharply. Bernd Lange, chair, European Parliament’s international trade committee, described the measure as an “arbitrary attack.”

“President Trump’s behavior is unacceptable. This latest move shows how unreliable the US side is. We have already seen arbitrary actions in other cases; this is no way to treat close partners,” Lange told Reuters. 

According to Eurostat, total trade in goods and services between the US and the EU reached €1.7 trillion (US$2 trillion) in 2024. The European Commission previously estimated the agreement would save automakers €500 million to €600 million (US$585 million to US$700 million) per month. 

Market Reaction and Industrial Outlook

Markets reacted negatively, with automotive stocks declining on the New York Stock Exchange. Shares of  Ford Motor fell as much as 2.4%, Stellantis dropped 3.3%, and General Motors declined 1.5%.

Despite rising trade tensions, several European manufacturers continue to invest in US production. Mercedes-Benz announced a US$4 billion investment in its Alabama facility through 2030 as part of a broader US$7 billion strategy, including shifting production of the GLC SUV from Germany to the United States. However, tariff pressures remain significant: the company reported group operating profit fell to €5.8 billion (US$6.9 billion) in February, citing approximately €1 billion in tariff-related costs.