Trump to raise EU auto tariffs to 25% next week

President Donald Trump said Friday that the United States will raise tariffs on cars and trucks imported from the European Union to 25% next week, warning that the move could jolt the global economy as it navigates wider economic strain.

Trump announced the increase in a social media post that said the EU “is not complying with our fully agreed to Trade Deal,” while he did not outline the specific reasons for the dispute in the post.

Asked by reporters about the tariff increase as he left the White House for Florida, Trump said the EU was not, “as usual,” adhering to last year’s trade framework, but he did not provide additional details about what he viewed as violations.

Trump also linked the tariff rise to production shifts, saying he believes the change “forces them to move their factory production much faster” to the United States.

A tariff fight amid Iran-war economic strain

The potential tariff increase arrives as the world economy faces softer growth expectations and higher inflation, with energy prices pushed up after the effective closure of the Strait of Hormuz following strikes by the U.S. and Israel that began at the end of February.

In the U.S., the announcement also lands as Trump faces political pressure ahead of November’s midterm elections, with inflation higher than what he inherited after returning to the White House last year on a promise that he could quickly tame prices that rose after the federal government’s coronavirus-era response.

The Associated Press reported that March inflation reached 3.3%, and that just 30% of U.S. adults approved of Trump’s handling of the economy in the latest poll by the AP-NORC Center for Public Affairs Research.

EU officials warn Trump to honor the deal

Europe has said it expects the prior agreement — reached after Trump and European Commission President Ursula von der Leyen agreed to the trade deal last July — to remain in place while negotiations continue.

The trade deal set a ceiling of 15% on most goods, but the Supreme Court this year ruled against the legal authority Trump used to charge that tax. The dispute then shifted to alternative tariff authority, with Trump’s administration imposing a 10% tax while investigating trade imbalances and national security issues to justify further tariffs.

An EU statement said it was implementing commitments in line with standard legislative practice and said it would keep its options open if the U.S. takes measures inconsistent with the agreement to protect EU interests.

In the European Parliament, Bernd Lange, chair of the trade committee, posted that Trump’s auto tariff hike was “unacceptable” and that the Trump administration “keeps breaking its commitments,” citing import taxes for steel and aluminum products among the examples.

Jennifer Safavian, CEO of Autos Drive America, which represents the American operations of foreign auto manufacturers, said the tariff increase “would threaten the progress that has already been made to open EU markets and grow the U.S. auto industry.”

AP reported that Trump’s tariff plans were already disrupted after the Supreme Court ruled earlier this year that the president lacked legal authority to declare an economic emergency and charge tariffs on goods from the EU and other states.

With that legal path narrowed, the Trump administration has opened trade investigations under Section 301 of the Trade Act of 1974 as a substitute basis. One investigation examines whether trading partners have been lax in cracking down on forced labor, while another is pursuing allegations that they have overproduced goods, driving down prices and putting American manufacturers at a disadvantage.

Scott Lincicome of the libertarian Cato Institute’s Center for Trade Policy Studies said Trump would likely use Section 232 of the Trade Expansion Act of 1962 to raise tariff rates on national security grounds, and he also described the trade deals as unreliable.

The European Union previously said the deal would save European automakers about 500 million to 600 million euros ($585 million to $700 million) a month, while Eurostat data cited by AP put the value of EU-U.S. trade in goods and services at 1.7 trillion euros ($2 trillion) in 2024, or an average of 4.6 billion euros a day.

AP reported that European Commissioner for Trade and Economic Security Maroš Šefčovič told reporters last week that the relationship with the U.S. had become more positive over the past year, even as Trump administration officials had not responded to questions about the tariff increase or why Trump said the agreement had been violated.