Trump says he's raising EU auto tariffs to 25% without clarifying how

• The Supreme Court ruled 6-3 in February that Trump's 'reciprocal' tariffs under IEEPA were illegal, forcing him to replace them with a temporary 10% global tariff under Section 122 with a 150-day time limit
• European automakers Mercedes, BMW, and Volkswagen would be most impacted as they import a large percentage of vehicles sold in the U.S. from European plants
• The EU warned in February that its trade deal with the U.S. could be in jeopardy and postponed its planned vote on the agreement following previous tariff announcements

Summary: Trump Announces 25% EU Auto Tariffs

Key Development:

President Donald Trump announced via Truth Social that he will increase tariffs on European Union cars and trucks to 25% next week, citing the EU's alleged non-compliance with "our fully agreed to Trade Deal." Notably, Trump did not specify which legal authority he would invoke to implement these levies.

Legal and Regulatory Context:

The announcement comes amid ongoing legal challenges to Trump's tariff authority. In February, the Supreme Court struck down Trump's "reciprocal" tariffs in a 6-3 ruling, determining that the International Emergency Economic Powers Act (IEEPA) does not authorize presidential tariff imposition. Following that ruling, Trump implemented a 10% "global tariff" under Section 122 of the Trade Act of 1974, though this came with a 150-day time limit.

Separately, the Trump administration previously imposed tariffs on vehicles and auto parts under Section 232, citing national security concerns—those remain in effect.

Trade Deal Status:

The EU-U.S. trade agreement is now in jeopardy. Following the new tariff announcement in February, the EU postponed its planned vote on the agreement and warned the deal could be at risk.

Market Impact:

European automakers face the most significant exposure, particularly Mercedes, BMW, and Volkswagen, which import substantial volumes of vehicles from European plants to the U.S. market. Trump noted that vehicles produced at U.S. plants would avoid tariffs entirely.

Bottom Line:

The lack of clarity on legal authority and escalating tensions with the EU create uncertainty for European automakers and may further destabilize transatlantic trade relations.