Trump to Increase Tariffs on EU Imported Vehicles

On Friday, President Trump announced that starting next week, tariffs on cars and trucks coming from the European Union will be raised to 25%. He accused EU leaders of not adhering to a trade agreement made last summer.

This announcement signals a significant escalation in what seemed to be a stabilizing relationship, following months of tensions over metal tariffs, the Greenland issue, and a perceived lack of support from Europe regarding U.S. military actions in Iran.

In a post on Truth Social, Trump expressed, “The European Union is not honoring the trade agreement we fully agreed to.”

The agreement, known as the Turnberry agreement—named after a golf resort in Scotland where it was announced in July 2025—had capped most U.S. tariffs on EU goods at 15%. In exchange, the EU had promised to eliminate tariffs on American industrial products and allow various U.S. agricultural exports into their markets. While many claimed the deal heavily favored the U.S., European leaders accepted it to avoid threatened tariffs of 30% and to maintain crucial diplomatic relations, especially amidst the ongoing situation in Ukraine.

However, the path to implementing this agreement has been rocky. The European Parliament has previously suspended the ratification process twice—once due to Trump’s Greenland comments and again after a Supreme Court decision limited the administration’s tariff powers. As of March 26, EU lawmakers approved a final bill to try and bring the deal to fruition, including conditions for U.S. compliance linked to lower EU tariffs and a sunset clause that would end the agreement in March 2028. Nonetheless, this bill still needs the approval of EU member states, and negotiations are ongoing.

Metal tariffs have continued to strain relations. Last August, the U.S. extended its 50% tariffs on steel and aluminum to hundreds of additional products, a move the EU claimed undermined the Turnberry agreement. Companies have been struggling with how to calculate tariffs based on individual product metal content. Although the U.S. recently altered their strategy, Germany and France informed other EU nations in a confidential meeting that this change seemed to increase tariff burdens on about half of the items affected, according to reports from Bloomberg.

Trump noted that the increased vehicle tax wouldn’t affect cars built in the U.S., stating, “It is well understood and agreed that there will be no tariffs on cars and trucks produced in American factories.”

This differentiation creates an uneven playing field for European car manufacturers. Companies like Volkswagen, Mercedes-Benz, and BMW—who have assembly plants in the U.S.—will face less impact from this increase. In contrast, Stellantis, which imports brands like Alfa Romeo and Maserati, will undergo a more immediate setback. Following the announcement, shares of Stellantis dropped as much as 3.6%, already under pressure from disappointing quarterly results released earlier that day.

This decision arrives at a challenging moment for the global economy. The ongoing conflict in Iran has raised energy prices and contributed to uncertainty in trade and investment on both sides of the Atlantic. In 2024, trade in goods and services between the EU and the U.S. was estimated at about 1.7 trillion euros (around $2 trillion), according to Eurostat.

The European Commission had projected that the original 15% tariff from the Turnberry agreement would save European car manufacturers between 500 million and 600 million euros monthly. An increase to 25% could negate those savings and potentially lead to retaliatory measures from Brussels, which has shown readiness for countersteps.

“A deal is a deal,” the Commission emphasized in February after the Supreme Court’s ruling altered the customs landscape. “EU products must continue to benefit from the most competitive treatment, without tariffs increasing beyond the clear and comprehensive caps previously agreed.”