Trump Says He’ll Place 25% Tariff on Autos from EU

Trump said in his social media post that the EU “does not fully comply with the Trade Agreement” but did not detail his objections in the post.

Asked by reporters on Friday about the increase in import duties as he left the White House for Florida, Trump said the EU was not adhering to last year’s trade framework “business as usual,” without detailing the source of the tension. He added that he believes “a move to higher tariffs will force them to move their factory production to the United States much more quickly.”

Trump and European Commission President Ursula von der Leyen agreed to the trade agreement last July. It set a 15 percent tariff cap on most goods, but the Supreme Court ruled this year against the legal authority Trump used to levy that tax. That prompted Trump to seek replacement authorities and impose a 10% tariff to impose new tariffs to make up for revenue losses while his administration investigates trade imbalances and national security issues.

The tariffs were hit at a moment when the Iran war was crashing the world economy with expectations of slower growth and higher inflation; Oil and natural gas prices rose due to the effective closure of the critical Strait of Hormuz following the US and Israeli attacks that started at the end of February.

At the same time, Trump faces political pressure in the United States, which is heading into midterm elections in November due to rising inflation. Republican Trump returned to the White House last year with a clear promise that he could quickly rein in rising prices following the government’s response to the coronavirus pandemic, but high energy costs pushed annual inflation to 3.3% in March; this was higher than what he had inherited.

Only 30% of U.S. adults approve of Trump’s handling of the economy, according to the latest poll by The Associated Press-NORC Center for Public Affairs.

Both the US and the EU have previously confirmed their commitment to preserving the trade framework known as the Turnberry Agreement, named after Trump’s golf course in Scotland.

The status of the 2025 deal was first thrown into doubt this year after the Supreme Court ruled that the president did not have the legal authority to declare an economic emergency and impose tariffs on goods from EU members and other states. Although European Commissioner for Trade and Economic Security Maroš Šefčovič told reporters last week that relations with the United States had become more positive last year, alternative tariffs being explored by the Trump administration could ultimately put them at risk of violating the agreement with the EU.

The EU had said it expected the bilateral agreement to save European automakers about 500 million to 600 million euros ($585 million to $700 million) per month.

The value of EU-US trade in goods and services will reach 1.7 trillion euros ($2 trillion) in 2024, or an average of 4.6 billion euros per day, according to EU statistics agency Eurostat.

“An agreement is an agreement,” the European Commission said in February after the Supreme Court’s decision. “As the United States’ largest trading partner, the EU expects the United States to honor its commitments set out in the Joint Statement, just as the EU stands by its commitments. EU products should continue to enjoy the most competitive treatment, with no tariff increases beyond the previously agreed open and all-inclusive cap.”