EU car industry faces persistent tariff pressure from the White House

The US and EU have reached a trade agreement, with President Joe Biden and European Commission President Ursula von der Leyen announcing a deal on July 27. However, uncertainty remains over the implementation of this agreement, particularly regarding tariffs on EU cars.

In a factsheet published on Monday, the US claimed that the EU had agreed not to apply telecommunications network usage fees in an upcoming Digital Network Act. This dispute between EU telecom companies and US tech giants in Brussels continues, adding to the complexity of the situation.

On July 31, the US published an executive order implementing new tariff structures effective August 7. The order imposes a 15% tariff on EU products, as outlined in the agreement reached by the US and EU presidents. However, the previous broad reciprocal tariffs, initially imposed in April under the International Emergency Economic Powers Act (IEEPA), remain partly in place due to ongoing legal challenges and political considerations.

President Trump announced a pause on many of these reciprocal tariffs in April, extending the pause from July 8 to August 1, to allow for further negotiations. Following this deadline, on August 1, he indicated plans to enforce tariffs up to 30% on goods from the EU, despite the recent trade deal capping auto tariffs at 15%. This discrepancy between the agreed tariff rate and the higher actual tariff rates creates a challenging situation for EU exporters.

EU Trade Commissioner Maroš Šefčovič welcomed "the first results of the EU-US deal" and said EU exporters now benefit from a more competitive position. However, the status of the provisions for exempting certain strategic products such as aircraft from tariffs, as mentioned earlier, is still not included in the executive order. The Commission and the US administration are struggling to agree on a joint text regarding these provisions.

Negotiations are ongoing over a series of exemptions, with pressure from the EU wine and spirits industry. The Commission expects these tariffs to soon be subject to lower tariff-rate quotas. The Commission also noted that a white paper on digital networks published in February 2024 assessed that imposing a network fee was "not a viable solution".

Uncertainty remains over the fate of steel and aluminium, currently hit by 50% US tariffs. The Commission spokesperson stated that such an exemption would not apply to US companies only. Any attempt to circumvent these tariffs will be penalized with a 40% duty on the goods concerned.

Goods already in transit before August 8 will enjoy the previous tariff rate of 10% until October 5. The tariffs on cars remain at 25%, higher than the agreed baseline 15% due to the ongoing reciprocal tariffs and enforcement actions. Šefčovič also stated that "the work continues", referring to ongoing negotiations on a joint statement intended to formalize the political trade agreement reached on July 27.

In summary, the tariffs on EU cars are technically supposed to be 15% per the recent US-EU trade agreement, but the US has not fully removed the higher reciprocal tariffs yet. The situation is complex and evolving, with ongoing legal challenges, phased enforcement timelines, and political considerations playing a significant role. EU exporters remain hopeful for a more competitive position, but uncertainty persists.

Despite the US-EU trade agreement, uncertainty remains regarding tariffs on EU cars, with tariff structures in the manufacturing industry being implemented through an executive order.
The US has claimed that the EU has agreed not to apply telecommunications network usage fees as part of the Digital Network Act, but a dispute continues between EU telecom companies and US tech giants.
The US has imposed a 15% tariff on EU products, as outlined in the agreement, but previous broad reciprocal tariffs remain in part due to ongoing legal challenges and political considerations.
EU Trade Commissioner Maroš Šefčovič has welcomed the benefits for EU exporters, but the status of provisions for exempting certain products, such as aircraft, from tariffs is still uncertain.
Negotiations are underway over a series of exemptions, including pressure from the EU wine and spirits industry, and the Commission expects these tariffs to be subject to lower tariff-rate quotas soon.
Uncertainty persists over the fate of steel and aluminium, which are currently hit by 50% US tariffs, with the Commission stating that any attempt to circumvent these tariffs will be penalized.
In the housing-market and real-estate sector, goods already in transit before August 8 will enjoy the previous tariff rate of 10% until October 5, while the tariffs on cars remain at 25%.
The Commission has published a white paper suggesting that imposing a network fee is "not a viable solution" in the fintech industry, adding to the complexity of the situation.
The agreement capping auto tariffs at 15% creates a challenging situation for EU exporters, as President Trump indicated plans to enforce tariffs up to 30% on goods from the EU.
Policy-and-legislation and politics play a significant role in the evolving situation, with negotiations ongoing on a joint statement intended to formalize the political trade agreement reached on July 27.
The uncertainty surrounding the implementation of this trade agreement has implications for personal-finance, banking-and-insurance, aerospace, retail, transportation, automotive, and other sectors of the business industry, including war-and-conflicts and general-news.