Trump Says US to Raise Tariff Rate on EU Cars, Trucks to 25%

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(Bloomberg) — President Donald Trump said he was raising tariffs on cars and trucks from the European Union to 25%, claiming that the bloc had failed to fully comply with a trade agreement negotiated with the US.

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“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,” Trump said Friday in a social media post. “The Tariff will be increased to 25%.”

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Trump said the levies would not apply to automobiles built in US facilities. “It is fully understood and agreed that, if they produce Cars and Trucks in U.S.A. Plants, there will be NO TARIFF,” the president said.

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The move could have a particular impact on Stellantis NV, which imports Alfa Romeo, Fiat and Maserati models into the US from Europe. The company’s US shares fell as much as 3.6% as of 12 p.m. in New York.

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Some prominent European automakers, however, including Volkswagen AG, Mercedes-Benz Group AG and BMW AG, have assembly plants in the US.

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Trump’s decision renews a contentious trade fight with a major economic bloc even as the Iran war and the resultant spike in energy prices place fresh strains on the global economy.

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Under their trade deal, the EU had agreed to erase levies on US industrial goods in exchange for a 15% tariff ceiling on most EU products. The bloc had accepted the lopsided deal in the hopes of keeping Trump engaged in Ukraine and avoiding a full rupture in trade relations.

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Trump did not specify how he believed the EU had failed to honor their trade pact on Friday, but the agreement had faced challenges, complicating negotiations over implementation. While the two sides reached their agreement in July, EU lawmakers are yet to fully ratify the pact as they seek further amendments.

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A key sticking point has been metals tariffs. In August, the US widened a 50% tariff on steel and aluminum to hundreds of new products. The move led to claims the US was violating recent commitments. Companies faced a difficult task calculating the tariffs, which were based on the percentage of these metals in their products.

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EU lawmakers then twice paused the deal’s ratification — once after Trump threatened to take Greenland, a Danish territory, and again after the US Supreme Court invalidated the president’s global tariff regime. 

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More recently, however, the two sides had expressed a desire to finally adopt the trade deal, with the US agreeing to change how it calculated the broadened metals tariff.

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—With assistance from Richard Clough.

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(Updates with additional details, background throughout)

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