Trump Threatens 25% Tariffs on EU Auto Imports Over Trade Dispute

President Donald Trump has announced his intention to increase tariffs on vehicles and trucks imported from the European Union to 25%, citing a failure by the EU to comply with an existing trade agreement. The announcement, made via Truth Social, specifies that the new levies will take effect next week. This escalation occurs against a backdrop of significant legal volatility regarding the administration's trade authority. In February, the Supreme Court ruled 6-3 that the International Emergency Economic Powers Act (IEEPA) did not authorize the President to impose 'reciprocal' tariffs. This forced the administration to pivot to other legal mechanisms, including a 10% to 15% global tariff rate under Section 122 of the Trade Act of 1974, which carries a 150-day time limit. Trump clarified that vehicles produced in U.S.-based plants will remain exempt from these tariffs, a move designed to incentivize domestic manufacturing. Currently, 25% tariffs on certain vehicles and parts remain in effect under Section 232, which cites national security concerns. The move is expected to hit European luxury automakers hardest, specifically Mercedes-Benz, BMW, and Volkswagen, as these firms rely heavily on exporting vehicles from European plants to the U.S. market. The EU has previously indicated that its broader trade relationship with Washington could be jeopardized by such unilateral tariff hikes, having already postponed a planned vote on their trade agreement in February.