Earlier this week, this site reported on how many companies have replaced worries about new tariffs with worries whether they will receive tariff refunds, after the U.S. Supreme Court reversed many of President Donald Trump’s tariffs earlier this year.
Now, President Trump is making tariff news again with his latest announcement: Trump is raising tariffs on vehicles made in the European Union (E.U.).
Trump’s latest tariff announcement
President Trump announced he would raise tariffs on E.U.-made cars, trucks, and other vehicles to 25%. Speaking to reporters, Trump said:
“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 believes the E.U. is out of compliance with a trade deal announced last year, which in his eyes would have leveled the playing field for E.U. automobiles, as well as other commodities. Trump further noted that if the E.U. produced vehicles in U.S. plants, rather than European plants, there would be no tariffs applied. After initially raising tariffs to 25% last year, Trump cut tariffs to 15% after the E.U.-U.S. trade deal. That deal is still being ratified by Europe’s central government – the European Parliament.
Trump’s goal
President Trump is hoping the increase in tariffs on E.U. automobiles will push the E.U. to bring automobile manufacturing – for both cars and trucks – into the U.S. He hopes that by increasing costs by hundreds of millions of dollars, he will force auto companies to make tough choices.
Challenges for the E.U.
The E.U. is a group of many nations, and those nations all have to agree to, and ratify, legislation to reduce tariffs, change economic policies, etc. The E.U. has not yet completed its implementation of reduced tariffs, and President Trump is adding further pressure with this new round of tariffs. If the E.U. agrees on a tariff reduction, it’s unclear whether Trump will reverse or hold off on the increase without some broader deal to bring more automobile manufacturing to the U.S. from Europe.
Trump may move the goalposts to apply further pressure to the Europeans, or may loop in other geopolitical issues such as Greenland, U.S. troop levels in Europe, feuds with European leaders, or other economic disagreements. The E.U. has walked a fine line during the second Trump presidency on appeasing the U.S. President while protecting its sovereignty and image on the world stage.
What’s next
As with any of President Trump’s tariff announcements, things are fluid and announcements can be held off, pushed off, or reversed at any time depending on conversations with world leaders, automobile manufacturers, and more.
