Brussels (dpa) – As of August 1, US tariffs on car imports from Germany and other EU nations will be retroactively reduced to 15 percent. EU Trade Commissioner Maroš Šefčovič announced this decision in Brussels, stating that the EU had met the necessary conditions. “This is welcome news for the automotive industry,” he remarked. Previously, the tariff rate for EU car imports into the US stood at 27.5 percent.
Before this announcement, the EU and US issued a joint statement that followed trade agreements made during a meeting between EU Commission President Ursula von der Leyen and US President Donald Trump in Scotland. The agreement noted that the US would lower its car tariffs retroactively to the start of the month as soon as the EU begins the legislative process for facilitating imports of specific US products. This includes the complete elimination of tariffs on US industrial goods and the removal of barriers for certain food products.
EU car manufacturers had been hoping for tariff reductions following the July 27 meeting, but initially, their vehicles were not included in the new base tariff rate of 15 percent. The recent statement indicates this will now be addressed, along with several other previously known agreements between the EU and the US.
Challenges for Winegrowers and Spirits Manufacturers
Unfortunately, winegrowers and spirits manufacturers in the EU received disappointing news. Šefčovič expressed regret that it was not possible to negotiate significant reductions below the base tariff of 15 percent for products like wine, beer, and other alcoholic beverages. However, he emphasized his commitment to finding a solution for “one of the EU’s most important interests,” stating that discussions are not permanently closed.
Regarding “digital trade barriers,” the EU and the US agreed to tackle these issues. When asked for specifics, Šefčovič clarified that they do not involve changes to the EU’s Digital Markets Act (DMA) or Digital Services Act (DSA). The DMA is designed to prevent large tech companies from disadvantaging smaller providers, while the DSA imposes stricter regulations on major online platforms to protect users.
Non-Binding Statement
The EU has assured Trump of a commitment to purchase US energy valued at $750 billion by the end of his term. According to earlier comments from von der Leyen, liquefied natural gas (LNG), oil, and nuclear fuels from the US will replace the gaps formed by the EU’s planned complete cessation of Russian gas and oil. Additionally, the EU plans to invest another $600 billion in the US in the coming years.
This joint statement is not legally binding, and the EU faces the risk that Trump could unilaterally raise tariffs if agreements are not honored. The US also did not accept the EU’s proposal for the mutual elimination of tariffs on industrial goods.
The EU agreed to the deal as failure to do so would have led to 30 percent tariffs and the potential onset of a trade war starting August 1.
There are concerns that Trump could escalate tensions further, potentially questioning NATO’s military assistance obligations or reducing support for Ukraine, both of which are sensitive issues given the threats from Russia.
Difficult Situation for Exporting Car Manufacturers
If Europe were not so reliant on the US for defense, it might not have accepted this deal. Economically, the EU, with around 450 million citizens across 27 countries, represents significant market power that could influence the US in a trade dispute.
While the political statement offers some improvement for the European automotive industry, the overall situation remains challenging. (August 21)
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