US import tariffs on cars from the EU are to be retroactively reduced

Brussels (dpa) – The US tariffs on car imports from Germany and other EU countries are to be retroactively reduced to 15 percent as of August 1. EU Trade Commissioner Maroš Šefčovič announced in Brussels that the EU would meet the necessary conditions for this. “I think this is welcome news for the automotive industry,” he said. The tariff rate for cars imported from the EU to the US was last at 27.5 percent.

Shortly before, the EU and the US had published a joint statement based on the trade agreements made in Scotland by EU Commission President Ursula von der Leyen and US President Donald Trump. It states that the US will reduce its car tariffs retroactively to the beginning of the month as soon as the EU initiates the legislative process for import facilitation in favor of certain US products. For example, tariffs on US industrial goods are to be completely eliminated, and barriers for the import of certain food products will be removed.

Car manufacturers in the EU had been waiting in vain for hoped-for tariff reductions after the meeting between Trump and von der Leyen on July 27, as their vehicles initially did not fall under the regulations for a new base tariff rate of 15 percent. According to the statement, this is now to be changed. The document also records numerous other already known agreements between the EU and the US. 

Winegrowers and spirits manufacturers face challenges 

There was no good news for winegrowers and spirits manufacturers in the European Union. Šefčovič regretted that no results significantly below the base tariff rate of 15 percent could be negotiated for products such as wine, beer, and other alcoholic beverages. At the same time, the EU Trade Commissioner emphasized that he wanted to work on a solution for “one of the EU’s most important interests”: “These doors are therefore not closed forever.”

With regard to “digital trade barriers,” the EU and the US announced that they would address these. In response to journalists’ questions about what exactly these entailed, Šefčovič clarified that they did not involve changes to the EU Digital Laws Digital Markets Act (DMA) or Digital Services Act (DSA). The former aims, among other things, to prevent large tech companies from disadvantaging other providers due to a dominant market position, while the latter imposes stricter requirements on large internet platforms to protect their users.

Statement is not legally binding 

Thus, the EU assures Trump that it will purchase US energy worth 750 billion dollars by the end of his term. According to earlier statements by Commission President von der Leyen, liquefied natural gas (LNG), oil, and nuclear fuels from the United States will fill the gaps that will arise after the planned complete abandonment of Russian gas and oil. Additionally, the EU promises Trump to invest another 600 billion US dollars in the US in the coming years. 

The joint statement is not legally binding. The EU must fear that Trump will unilaterally raise tariffs again if agreements are not implemented. The US did not agree to the EU’s proposal to mutually eliminate tariffs on industrial goods.

The EU accepted the deal because without an agreement, US tariffs of 30 percent and a real trade war would have threatened starting August 1.

There was also concern that Trump could build new threats in the event of an escalated conflict – for example, by questioning the military assistance obligation within NATO again or reducing support for Ukraine – both of which are extremely sensitive topics given the threats from Russia. 

Situation for exporting car manufacturers remains difficult 

If Europeans were not so dependent on the US in the field of defense, they might not have accepted the deal. Economically, the EU, with about 450 million citizens in 27 countries, is a real market power that could significantly impact the United States in a trade conflict. 

The situation for the European automotive industry improves somewhat due to the political statement, but it remains difficult. (August 21)