Why Europe’s car industry is at the centre of a new US trade war
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- Trump threatened to raise tariffs on EU cars and trucks from 15% to 25% after accusing the bloc of breaching the July 2025 trade deal.
- EU denied the claim, insisting it is meeting its obligations under the agreement.
- European Commission confirmed the EU’s $750 bn investment in U.S. energy and $600 bn in other U.S. purchases despite the tariff threat.
- US ran a $236 bn goods trade deficit with the EU in 2024, which Trump says the tariffs aim to address.
Why it matters: U.S. auto manufacturers gain from a 10% tariff increase on European cars, while EU automakers lose market share and revenue, potentially curbing the EU’s $750bn investment pledge and raising U.S. car prices.
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