US Cars to Enter EU Duty-Free Under New Trade Agreement

A new trade agreement between the European Union and the United States is set to allow US automobiles to be imported into the EU without tariffs. This development was confirmed by an EU official in Brussels following a recent agreement reached in Scotland.

Currently, the EU imposes a 10% tariff on American car imports. The EU official indicated that this tariff could be reduced to zero, provided that the US fulfills its commitments under the agreement, specifically by lowering the existing tariffs on European car imports from 27.5% to 15%.

This arrangement raises concerns for European car manufacturers as they brace for increased competition from US automakers. The new 15% tariff on EU cars marks a significant increase from the previous rate of 2.5% before the Trump administration took office.

EU Commission President Ursula von der Leyen explained that the decision to proceed with the trade agreement was influenced by the looming threat of a 30% tariff that would have come into effect on August 1. Additionally, she highlighted that the current tariffs imposed by the US on European cars are a result of decisions made during the early months of Trump's second term.

The trade deal, which aims to resolve an ongoing tariff dispute, was finalized during a meeting between President Trump and President von der Leyen at a golf resort in Turnberry, Scotland. The agreement also includes provisions for the EU to purchase more energy from the US and to increase investments in the country.

Limited categories of goods are expected to be exempt from tariffs, including airplanes, specific chemicals, agricultural products, and critical raw materials, according to von der Leyen.

In response to the agreement, the Federation of German Industries (BDI) expressed concern, labeling the deal as an inadequate compromise that sends a troubling message to the closely intertwined economies on both sides of the Atlantic. They cautioned that the 15% tariff on European exports could have severe repercussions for Germany's export-driven industry.