Trump Moving Forward with 25% on EU Automobiles

The Trump Administration is moving forward with a new 25% tariff on European Union (EU) automobiles.

However, there are still some indications this tariff threat is to pressure the EU to follow through with the trade deal it made with the U.S. in July of last year. If the EU moves forward with legislation and tariff adjustments aligning with the deal, it’s possible the U.S. could abandon the new 25% tariff.

Under the 2025 deal, the tariff on most EU goods, including automobiles, would be 15%. Tariffs on U.S. goods to the EU were to be removed while the EU was to buy $750B worth of energy from the U.S., purchase a “vast amount” of U.S. military equipment, and invest an additional $600B into the U.S.

After that initial trade deal was made, countries in the EU bloc have been trying to add amendments, including a “sunset clause” to make the deal expire in March of 2028 unless it is renewed. As of yet, the legislation for the deal, though its framework was initially agreed to, has not been passed by the European Parliament. And the EU tariffs have not been adjusted.

President Trump, of course, saw a setback with his tariffs on the EU when the Supreme Court ruled against his usage of the International Emergency Economic Powers Act (IEEPA) to authorize them. After the Supreme Court made its ruling, President Trump utilized Section 122 of the Trade Act of 1974 to implement a broad 10% tariff. Then the Trump Administration launched probes into trading partners, including the EU, so it will be able to use the more legally tested Section 301 authority to replace the lost IEEPA tariffs.

In the meantime, the Supreme Court ruling emboldened the EU lawmakers who were opposed to the trade deal with the U.S., giving them more opportunity to stall legislation to follow through with it.

EU governments and lawmakers held a meeting about the trade deal with U.S. yesterday (March 6th). While they were negotiating on the deal with the U.S., it was a “trilogue” negotiation between representatives of the European Parliament, the European Commission, and the 27 EU member countries and did not include representation from the U.S. Politico reports that after six hours of negotiations, they failed to reach a deal.

This failure to reach a deal to move forward with the implementation of the EU’s obligations under the trade deal with the U.S. comes after President Trump’s threat to up the tariff on EU automobiles to 25%. He first announced it Friday of last week with a Truth Social post, where he wrote:

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. The Tariff will be increased to 25%. It is fully understood and agreed that, if they produce Cars and Trucks in U.S.A. Plants, there will be NO TARIFF. Many Automobile and Truck Plants are currently under construction, with over 100 Billion Dollars being invested, A RECORD in the History of Car and Truck Manufacturing. These Plants, staffed with American Workers, will be opening soon — There has never been anything like what is happening in America today! Thank you for your attention to this matter. President DONALD J. TRUMP

While a presidential action hasn’t been seen yet this week to implement the new 25% tariff, U.S. Trade Representative Jamieson Greer did confirm this week that President Trump is moving forward with the tariff, as reported by Rachel Roberts in the Epoch Times:

The United States will move forward with President Donald Trump’s proposed 25 percent tariffs on European Union automobile imports, Washington’s trade representative, Jamieson Greer, said on May 4.

“I was in contact with both European and German trade officials this weekend to help them understand why this was happening and remind them of all the conversations we’ve had about ​their compliance,” Greer told CNBC in an interview.

“I’ll continue to have those conversations, but ​the president’s moving forward with this action.”

When asked whether the tariff would form part of a larger negotiation with the bloc or become a permanent state, Greer added: “It’s one part ​of the deal.”

With the EU’s failure to reach an agreement today concerning the trade deal with the U.S., it seems doubtful that the EU will implement legislation to meet its obligations in the deal before this tariff goes into effect.

The question becomes whether this return to tariff hikes will induce the EU to return to the deal with the U.S., getting it finally implemented, or if that 2025 deal gets completely scrubbed.

First Batch of Tariff Refunds to Be Issued Next Week

Finally, for a quick update on tariff refunds, the government said it will be issuing the first batch of them early next week, as reported in an Epoch Times articly by Aldgra Fredly:

U.S. Customs and Border Protection (CBP) said on May 4 that the first batch of refunds from tariffs imposed by President Donald Trump, which the Supreme Court struck down in February, would begin on May 12.

If you’re a shipper who paid IEEPA tariffs and haven’t declared for your refunds yet, Universal Cargo can help you through the process. Of course, as a trusted freight forwarder since 1985, we’re always here for all of your international shipping needs.