US and EU Finally Agree To Cut Car Tariffs In New Deal
A new trade deal between the United States and the European Union will significantly reduce tariffs on European-built vehicles.
Key Points
- The new U.S.-EU trade deal reduces vehicle import duties from 27.5% to 15%, easing pressure on automakers after President Trump threatened 30% tariffs starting August 1.
- The EU committed to purchasing $750 billion in U.S. energy and semiconductors and investing $600 billion in the U.S. economy, while also agreeing to zero tariffs on select goods like aircraft parts and critical raw materials.
- While car tariffs are reduced, the 50% tariff on steel and aluminum remains in place for now, with a possible shift to a quota system still under negotiation.
After months of negotiations, the agreement drops the import duty on most EU goods to 15 percent, including cars. President Trump had threatened sweeping 30 percent tariffs on EU imports starting August 1 if no deal was reached.
The two sides hammered out a compromise that reduces the tariff rate from the current 27.5 percent—keep in mind the new rate is still well above the 4.8 percent average, which was in place until the Trump administration took office earlier this year. The deal follows a similar agreement with Japan.
Beyond automotive tariffs, the EU has pledged to buy $750 billion in U.S. oil, gas, nuclear fuel, and semiconductors over the next three years. The agreement also includes a massive $600 billion investment package into the U.S. economy, encompassing the purchase of military hardware and advanced manufacturing technology.
European Commission President Ursula von der Leyen confirmed that the deal eliminates tariffs entirely on a range of goods, including aircraft and parts, certain chemicals, generic pharmaceuticals, semiconductor equipment, agricultural products, and critical raw materials.
Notably, America's 50 percent tariff on steel and aluminum remains unchanged for now, though negotiators indicated a quota system could be discussed in the near future. Reuters also reports that the EU agreed to ease non-tariff barriers on cars and agricultural goods, but details are still being finalized.
For automakers, the reduced 15 percent tariff is welcomed in place of a 30 percent threat, but it's still tough to stomach considering the new tariff rate is 3x what it was this time last year.
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An experienced automotive storyteller and accomplished photographer known for engaging and insightful content. Michael also brings a wealth of technical knowledge—he was part of the Ford GT program at Multimatic, oversaw a fleet of Audi TCR race cars, ziptied Lamborghini Super Trofeo cars back together, been over the wall during the Rolex 24, and worked in the intense world of IndyCar.
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