Donald Trump, as President, stated on Friday that next week he will increase taxes on EU trucks and cars to 25%, and he says this is because the EU has not done what they promised in a trade agreement. This impacts a major European industry and once again brings up the Turnberry Agreement.
Trump announced this on his Truth Social account, writing that because the European Union isn’t keeping to the trade deal they both agreed on, he will be raising the taxes on cars and trucks from the EU coming into the United States next week. He then added the tax will be 25%. Trump also said that cars made by European companies in the US will not be taxed, and claims over $100 billion is being spent on new factories in America.
Trump says he is increasing the tax to enforce a deal that the EU has broken. He says the change will happen next week, and he’s emphasizing making things here in the United States.
Tariff hike and stated rationale
Last July, Trump and Ursula von der Leyen (the President of the European Commission) came to an agreement called the Turnberry Agreement. This set a limit of 15% on most taxes (tariffs) on goods, and both sides later said they were still committed to this agreement.
Key points from Trump’s announcement include:
– Tariff on EU cars and trucks rising to 25%
– EU accused of not complying with trade deal
– US-made vehicles by EU firms face no tariff
– Announcement posted on Truth Social
– Changes to take effect next week
What the Turnberry Agreement set out
However, it became unclear what would happen with the 2025 agreement after the Supreme Court said this year that the President didn’t have the right to declare a financial crisis and then put taxes on EU goods. Because of that ruling, the tax limit was lowered to 10% as the government used other laws to add new taxes on imports.
The Trump government is currently looking into trade imbalances and potential risks to the country’s security, to introduce a new system of taxes. This could eventually mean the agreement with the EU is broken.
In February, after the Supreme Court decision, the European Commission said “an agreement is an agreement”. They said that because the EU is the US’s biggest trading partner, they expect the US government to keep to what was said in the joint statement.
EU position and economic stakes
The Commission also said that EU products should continue to get the best prices, with no tax increases above the agreed limit. The EU had previously said this agreement between the two of them could save European car makers between 500 and 600 million euros a month.
This is a big issue. In 2024, trade between the EU and the US in both goods and services came to 1.7 trillion euros – that’s an average of 4.6 billion euros every day, according to Eurostat. Any change in taxes on cars could have a knock-on effect on the whole supply chain on both sides of the Atlantic.
Trump was very clear that EU cars made in the United States will not be affected by the new tax. He wrote, “If they make Cars and Trucks in U.S.A. Plants, there will be NO TARIFF.”
Autos built in America: Trump’s carve-out
He says a lot of car and truck factories are being built and will be opening shortly, and he describes this as a record amount of investment and the most important time ever for US manufacturing. He said these things, though.
The 25% tax will be happening next week, so people are immediately looking at how it will be put in place, if it’s legally allowed, and what the EU might do in response, based on the Turnberry Agreement. The government’s continuing investigations into trade and security will also be looked at closely.
What comes next
Currently, the argument is between Trump saying the EU isn’t following the agreement, and the EU saying the agreed tax limit must be kept. How these two sides will work with the Supreme Court’s ruling will decide what happens next.
