Story perspectives

Trump hikes EU car tariffs to 25%, VW redirects Tennessee plant

5/2/2026

Summary

Trump Raises Tariffs

President Donald Trump announced on May 1, 2026 that United States (U.S.) tariffs on European Union (EU)-imported cars and trucks will rise to 25% next week.
He said the hike responds to the European Union’s non-compliance with the 2025 trade framework, noting that the EU delayed its ratification vote.
Automakers Mercedes-Benz, BMW, Volkswagen and Stellantis will review the policy, with Volkswagen shifting its Tennessee plant from the ID.4 to the Atlas SUV.

Summary

U.S. Tariff Impact

Oxford Economics estimates a mirrored 25 % EU tariff would shrink U.S. vehicle exports to the bloc by about 3.1 %.
The 25 % Section 232 duty sits on the 2.5 % MFN rate, raising total tariffs to 27.5 %.
EU safeguard rules let it suspend preferences if the U.S. breaches the 15 % ceiling or adds duties.
Since U.S. auto exports to the EU are only about 2 % of production, the sector faces limited direct impact.

History

Historical Context

Reagan’s 1983 memorandum imposed a 45 % duty on heavyweight motorcycles after Harley-Davidson’s USITC petition, marking a rare protectionist move. The 1980s also saw voluntary export restraints limiting Japanese auto shipments to 1.68 million units, prompting U.S. plant builds. Echoing that approach, President Trump announced a 25 % tariff on EU cars in May 2026, reviving high-duty trade pressure.

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Trump Raises Tariffs

President Donald Trump announced on May 1, 2026 that United States (U.S.) tariffs on European Union (EU)-imported cars and trucks will rise to 25% next week.
He said the hike responds to the European Union’s non-compliance with the 2025 trade framework, noting that the EU delayed its ratification vote.
Automakers Mercedes-Benz, BMW, Volkswagen and Stellantis will review the policy, with Volkswagen shifting its Tennessee plant from the ID.4 to the Atlas SUV.

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