Trump threatens higher EU auto tariffs as trade deal debated

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President Donald Trump has threatened to apply the 25% auto tariff rate that his administration imposed on most imported cars and trucks last year to vehicles originating in the European Union, as intra-EU disagreements over the trade agreement insisted upon by Trump has delayed formalization by the 27-nation bloc. The latest quarrel threatens to lead to tariff escalation on both sides of the Atlantic.

“I am pleased to announce that, based on the fact that 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 said in a social media post on May 1.

The threatened increase has yet to come, and EU officials are attempting to iron out disagreements between the member countries and the U.S. over the negotiated framework. In another social media post on May 7, Trump said he would extend his self-imposed deadline to July 4, to give the EU more time to reach agreement on necessary legislation.

Raising the U.S. tariff rate on autos would further endanger the fragile trans-Atlantic trade framework the Trump administration demanded last year. Trump’s threat comes as the European Parliament has been slow to pass legislation needed to uphold the EU side of the framework, a delay initially set off by the Trump administration’s rhetoric around its efforts to acquire Greenland. In addition, some EU members do not want to formalize the handshake agreement unless it includes a lowering of the 50% steel and aluminum tariffs that Trump also imposed last year.

Trump and senior economic officials within the administration have also said since February that they will raise the temporary Section 122 worldwide tariff rate to 15%, from the current 10% put in place days after the Supreme Court’s ruling against tariffs Trump imposed in 2025 under a novel interpretation of the International Emergency Economic Powers Act (IEEPA).

However, on May 7 the U.S. Court of International Trade ruled against the Trump administration’s interpretation of Section 122, determining that the presidential proclamation citing that portion of the Trade Act of 1974 to impose the 10% tariff overstepped the authority granted under that law. (See our article on this decision)

The Trump administration indicated to the U.S. Court of Appeals for the Federal Circuit on May 8 that it intends to appeal the ruling. The trade court ordered a permanent injunction on tariffs collected under that proclamation for entities deemed to have standing — the state of Washington, which demonstrated that it directly pays the tariff, and two businesses — but the administration avoided a nationwide injunction on the tariffs, at least for now.

An increase to 15% would push some products covered by the informal EU-U.S. trade outline over the agreed-upon rate for EU imports, as the Section 122 rate stacks on top of existing most-favored-nation rates and is a blunt instrument that does not allow for country-specific measures.

While Trump can no longer use the threat of IEEPA tariffs as a cudgel, the auto tariffs fall under a more established interpretation of trade law. The administration also has included the EU in multiple Section 301 investigations of trade practices by dozens of countries, which are likely to result in tariffs similar to the now-defunct IEEPA rates. U.S. Trade Representative Jamieson Greer, who leads the agency overseeing those investigations, met with EU officials on May 5.

So far European officials have expressed defiance to the latest tariff ultimatum, amid intra-EU disagreement over whether to stick to the framework or walk away. European Commission President Ursula von der Leyen disputes Trump’s claim that the EU is not complying with last year’s framework and told reporters May 5 that both sides are implementing the deal “while respecting the different democratic procedures we have.”