Auto makers and investors track how a 25% tariff reshapes cross‑Atlantic supply chains
Donald Trump is about to slap a 25 percent tariff on European cars and trucks — and he is doing it just as the global economy absorbs a war‑driven energy shock.
US President Trump said he will increase tariffs on autos from the European Union to 25 percent next week, up from the 15 percent level embedded in last year’s trade framework, saying the EU “is not complying with our fully agreed to Trade Deal.”
He wrote that “if they produce Cars and Trucks in USA. Plants, there will be NO TARIFF,” as reported by AP News.
He added that the higher rate “forces them to move their factory production much faster” to the US.
The planned hike targets the centrepiece of the Turnberry Agreement, a US‑EU deal agreed last July that set a 15 percent tariff on most goods and capped duties at that level.
Reuters said the Trump administration had already imposed a 25 percent tariff on global auto imports under a national security law, then cut EU duties to a net 15 percent in exchange for the bloc eliminating tariffs on US industrial goods, including autos, and accepting US safety and emissions standards.
Implementation in Europe has lagged.
Reuters reported that EU lawmakers advanced legislation in March to implement the tariff cuts, but the process is unlikely to finish before June as member states and the European Parliament negotiate final texts.
Euronews said MEPs want safeguards, including a “sunset clause” that would let the deal expire in March 2028 unless both sides renew it, and a “sunrise clause” tying tariff preferences to US compliance with Turnberry.
The European Commission rejected Trump’s claim of non‑compliance, according to AP News.
It said it is implementing its “commitments in line with standard legislative practice” and keeping the US “fully informed throughout.”
The Commission said it remains “fully committed to a predictable, mutually beneficial transatlantic relationship,” but will keep its “options open to protect EU interests” if Washington breaches the agreement.
Political and economic pushback in Europe has been sharp.
AP News said Bernd Lange, who chairs the European Parliament’s trade committee, called the auto hike “unacceptable” and accused the Trump administration of “breaking its commitments,” including on steel and aluminium tariffs.
Reuters reported that he said the move “demonstrates just how unreliable the US side is” and urged a response with “utmost clarity and firmness.”
The same article also quoted German economist Marcel Fratzscher calling for retaliatory tariffs and new taxes on US tech companies.
Auto makers and markets have already reacted.
AP News reported that Jennifer Safavian of Autos Drive America warned the higher rate “would threaten the progress that has already been made to open EU markets and grow the US auto industry.”
Reuters said shares of Ford fell as much as 2.4 percent, Stellantis dropped 3.3 percent and General Motors slid 1.5 percent after Trump’s announcement; Sky News also reported declines in all three.
The same article added that Mercedes‑Benz plans US$4bn of investment in its Alabama plant through 2030 and US$7bn in total US operations, and that its operating profit more than halved to 5.8bn euros partly because of 1bn euros in tariff costs.
The timing adds macro risk.
AP News reported that the Iran war has “crushed the world economy,” with expectations of slower growth and higher inflation as oil and natural gas prices climb following the effective closure of the Strait of Hormuz after US and Israeli strikes at the end of February.
The same outlet higher energy costs pushed US inflation to 3.3 percent in March, above the rate Trump inherited, and only 30 percent of US adults approve of his handling of the economy, according to the latest AP‑NORC poll.
The legal footing is also unsettled.
CNBC reported that the US Supreme Court ruled the International Emergency Economic Powers Act “does not authorize the President to impose tariffs,” undercutting Trump’s earlier “reciprocal” duties.
AP News said that decision reduced the practical Turnberry ceiling from 15 percent to 10 percent, prompting the administration to impose a 10 percent tax while it investigates trade imbalances and national security issues.
The outlet reported that Trump imposed 25 percent Section 232 tariffs on foreign autos in March 2025 and later reduced them as part of the EU framework.
The European Commission had estimated the bilateral deal would save European car makers about 500m to 600m euros a month, and EU‑US trade in goods and services reached 1.7tn euros in 2024, or 4.6bn euros a day, according to Eurostat figures cited by the same outlet.
