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Tariffs

EU-US Trade Deal Sparks Concerns Among Global Auto Industry

Strategic Insights

— 2 min read

The European Union and the United States have agreed on a trade deal that imposes a 15-per-cent tariff on EU cars and other goods imported to the US. The deal, set to take effect on Friday, also includes a joint investment of US$600-billion and the purchase of US energy and military equipment. However, the global auto industry is warning about the negative impact of the deal, citing concerns about unfair treatment of Canadabased automakers and the distortion of supply chains.

Key Takeaways:

  • The EU-US trade deal imposes a 15-per-cent tariff on EU cars and other goods imported to the US, while sparing US-made cars from tariffs in Europe.
  • The tariff rate is lower than the 30-per-cent threat made by US President Donald Trump but higher than the 2.5-percent duty on EU-made cars prior to his taking office.
  • US-made cars currently face a 10-per-cent duty in Europe, and European steel remains tariffed at 50 per cent.
  • The American Automotive Policy Council has issued complaints about the 10-per-cent tariff on British-made cars and the disparate treatment of Canadabased automakers.
  • David Adams, head of Global Automakers of Canada, points out that 50 per cent of the value of Canadian-built vehicles is American content, and vehicles made outside North America have almost no US content and create few jobs.
  • Prime Minister Justin Trudeau will only sign a trade agreement with the US that is the "right deal," but some tariffs are likely.
  • North American automakers argue that no tariffs are acceptable on the cars they produce in an integrated supply chain governed by the US-Mexico-Canada Agreement.
  • Sigrid de Vries, director-general of the European Automobile Manufacturers' Association, warns that the EU agreement will continue to have a negative impact on the industry in both the EU and US.
  • Hildegard Muller, head of the German Association of the Automotive Industry, estimates that the EU-US deal will cost the industry in Germany billions of dollars.

Statistics:

  • 22% of total European vehicle production in 2024 was destined for the US market.
  • 750,000 EU-made cars were exported to the US in 2024, with 15% being battery electric.
  • 165,000 US-made cars were exported to the EU in 2024.
  • Over 12,500 layoffs and production cuts have occurred in Ontario since US President Trump imposed tariffs in April.

Sources:

  • ERIC ATKINS; Staff
  • U.S. President Donald Trump and European Commission President Ursula von der Leyen
  • David Adams, head of Global Automakers of Canada
  • Sigrid de Vries, director-general of the European Automobile Manufacturers' Association
  • Hildegard Muller, head of the German Association of the Automotive Industry
  • European Automobile Manufacturers' Association
  • Canadian Vehicle Manufacturers' Association
  • American Automotive Policy Council

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