The Volkswagen plant in Wolfsburg, Germany. Photo: Dietmar Rabich, CC BY-SA 4.0, via Wikimedia Commons.
President Donald Trump said on Friday that he will raise tariffs on cars and trucks imported from the European Union to 25 percent starting next week, accusing the bloc of failing to honour the trade deal the two sides struck last summer and reopening a transatlantic trade fight that had been quiet for months.
Trump announced the move in a post on his Truth Social platform and repeated it to reporters as he left the White House for Florida. "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," he wrote. "The Tariff will be increased to 25%."
Speaking to reporters before boarding Marine One, Trump was blunt about the purpose. "We raised the tariffs on cars coming in from the European Union because the European Union was not adhering to the trade deal we have," he said. "I raised the tariffs on cars and trucks to 25 per cent. That's billions of dollars coming into the United States and it forces them to move their factory production much faster."
He added that more than $100 billion worth of car plants are now being built in the United States, calling it a record. Cars and trucks produced in American plants would face no tariff at all.
The deal at the centre of the dispute
The agreement Trump says the EU has broken is the trade framework he reached with European Commission President Ursula von der Leyen in July 2025, at his Turnberry golf course in Scotland. It capped US tariffs on most EU goods, including cars, at 15 percent — well below the 30 percent Trump had previously threatened — in exchange for the EU dropping levies on US industrial goods.
That deal was already under strain. The US Supreme Court ruled this year that Trump lacked the authority to declare a national emergency to justify many of his tariffs, a decision that cut the ceiling on EU tariffs to 10 percent. The new car tariff, by contrast, is being pursued under Section 232 national-security powers — the same authority behind the 25 percent auto tariffs Trump imposed in March 2025, before the EU framework lowered them — a route that shields the move from the court ruling.
The EU had said the July deal would save European automakers about 500 to 600 million euros ($587 million to $704 million) a month.
Europe pushes back
Brussels rejected Trump's charge outright. A spokesman for the European Commission said the bloc was not in breach of the deal. "We remain fully committed to a predictable, mutually beneficial transatlantic relationship," the spokesperson said, adding that the commission "will keep our options open to protect EU interests" if Trump does not honour the agreement.
Germany's auto industry, which would bear the brunt of the increase, urged both sides to step back. Hildegard Mueller, president of the VDA auto association, called on Washington and Brussels to honour the existing agreement and resolve the issue quickly, warning that the cost of additional tariffs would be enormous and would likely be felt by American consumers as well.
Bernd Lange, who chairs the European Parliament's trade committee, criticised the decision and warned it could trigger countermeasures from Brussels. European trade unions, meanwhile, called on the EU to bring in urgent job protection measures, warning that the tariffs would deliver a major blow to the European car industry at a time when the sector is already under pressure.
What happens next
The new rate is due to take effect next week, though Trump gave no exact date. The EU has signalled it would prefer to de-escalate and preserve the existing pact, but it has been preparing retaliatory options for months, including reactivating suspended tariffs on American goods.
The move lands at a fragile moment for the world economy, already strained by the US-Israel war with Iran and by the tariff wars of the past year. Critics note that the duties are in practice paid by American businesses importing the vehicles, which then pass the costs on to consumers — a point underscored by the fact that, following a court order, the Trump administration is expected soon to begin issuing the first of an estimated $166 billion in tariff refunds to companies that paid the duties.
Both sides say they want the deal to survive. Whether it does may depend on whether Brussels answers with retaliation — or with a concession.
Sources: Associated Press; Al Jazeera; RTHK; Times of Oman; industriAll Europe.