EU countries push to settle US trade deal to avoid car tariff hike

• German Chancellor Friedrich Merz urged rapid EU action, noting 'the Americans have it finalised, and the Europeans haven't,' as Germany faces the greatest impact from potential car tariff increases
• The EU-US trade deal was struck in July 2024 at Trump's Turnberry resort, but EU implementation was twice paused by parliament over Trump's threats regarding Greenland and other geopolitical tensions
• EU Parliament's trade committee seeks 'sunrise, sunset clauses and safeguards' before approval, though the centre-right European People's Party, the largest parliamentary group, supports swift conclusion this month

EU PUSHES TO FINALIZE US TRADE DEAL AMID CAR TARIFF THREAT

Key Developments:

U.S. President Donald Trump threatened Friday to increase tariffs on EU cars and trucks to 25% within the coming week, citing the bloc's failure to comply with terms of a trade deal struck at his Turnberry, Scotland resort in July 2024. Nine months after the agreement, the EU has yet to remove tariffs on imported U.S. industrial goods as promised.

Stakeholders and Positions:

German Chancellor Friedrich Merz is urging rapid EU action, noting Germany faces the greatest impact from higher car tariffs. EU member states are broadly pushing for swift implementation of the deal. Manfred Weber, head of the European People's Party (largest parliamentary group), supports a quick conclusion with final approval targeted for this month.

However, EU Parliament trade committee chair Bernd Lange called Trump's behavior "unacceptable" and insists on safeguards including sunrise and sunset clauses before proceeding.

Timeline and Status:

• July 2024: Initial trade deal agreed
• May 4, 2025: EU representatives and Parliament resume negotiations Wednesday
• EU legislation previously paused twice due to Trump's threats over Greenland acquisition support and other issues

Market Implications:

The automotive sector faces significant uncertainty, particularly German manufacturers. The 25% tariff threat represents substantial escalation from current levels. Bruegel think tank senior fellow Ignacio García Bercero suggests Trump's threat may be tactical pressure to force EU agreement, cautioning against hasty decisions or retaliatory escalation.

The standoff highlights ongoing EU-U.S. trade tensions with material implications for European auto exports and broader transatlantic commerce.