Economy May 4, 2026 08:22 AM

EU Pushes to Finalize Its Part of US Trade Pact to Avert 25% Auto Tariff

Brussels lawmakers and member states press for swift approval of implementing legislation as Washington signals higher levies on European vehicles

By Ajmal Hussain
EU Pushes to Finalize Its Part of US Trade Pact to Avert 25% Auto Tariff

European Union governments are pressing the European Parliament and the Council to quickly finalize legislation that would carry out the bloc’s commitments under a trade deal with the United States. The move aims to head off a planned increase in U.S. tariffs on cars and trucks to 25%, announced by President Donald Trump, after negotiations on eliminating certain duties remain incomplete nine months after the agreement.

Key Points

  • EU institutions are negotiating legislation to implement the bloc's commitments under a trade agreement with the United States.
  • U.S. President Donald Trump announced plans to raise tariffs on EU cars and trucks to 25% this week, citing the EU's failure to meet terms of the July deal.
  • Automotive and industrial sectors are directly affected by the potential tariff increase; the negotiations involve parliamentary safeguards and Council approval.

EU governments are urging rapid completion of the bloc's legal steps to implement the EU side of a trade agreement with the United States, seeking to avoid a jump in U.S. tariffs on motor vehicles.

Lawmakers in the European Parliament and representatives of member states in the Council are due to continue talks on Wednesday over legislation to roll back EU duties on imported American industrial goods. Parliament is pushing for a package of safeguards to be included in the implementation measures.

President Donald Trump said on Friday that he intended to raise duties on EU cars and trucks to 25% this week, blaming the EU for not meeting the terms of a deal reached in July at his Turnberry golf resort in Scotland. The tariff increase is presented by the U.S. administration as a response to the EU's failure to eliminate certain tariffs on American industrial imports as the two sides had agreed.

Nearly nine months after the July accord, the EU has still not taken the legislative steps needed to remove those duties, leaving part of the agreement unimplemented. The European Parliament has twice paused the required legislation amid wider tensions, including previous threats from President Trump to impose tariffs on European allies over their stance on a proposed acquisition of Greenland and his later announcement of new import levies.

EU member states largely favor reaching a quick deal between Parliament and the Council to discharge the bloc's obligations under the agreement, Reuters reported on Monday citing EU diplomats. The diplomats indicated that governments want the legislative process to move swiftly to reduce the risk of retaliatory measures from the United States.

Manfred Weber, who leads the centre-right European People's Party - the largest group in the European Parliament - said negotiations should be wrapped up quickly so that the full parliament can give final approval this month. His remarks underscore a desire among influential parliamentary blocs to resolve outstanding issues without delay.

As institutions work through the text and safeguards, the immediate deadline set by Washington has heightened urgency in Brussels. Lawmakers and member states are balancing the technical details of implementation with the political imperative to prevent an escalation in transatlantic trade barriers.

Risks

  • The United States moving forward with a 25% tariff on EU cars and trucks, which would directly impact the automotive sector and cross-border vehicle trade.
  • Delays or further pauses in the European Parliament's legislation could prolong the lack of implementation of the deal, increasing uncertainty for industrial exporters.
  • Political pressures related to broader disputes - such as prior threats tied to the Greenland acquisition issue and new import levies - could complicate timely agreement between EU institutions.

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