During the first cabinet meeting of newly re-elected President Donald Trump, tensions with Europe quickly resurfaced. The American leader has announced new tariffs targeting European automobiles and other sectors. The European Union is ready to respond.
Tough times ahead
The European automotive industry, already facing significant difficulties, is now bracing for even more difficulties. The latest setback comes from across the Atlantic, where the U.S. President has decided to impose tariffs on cars and other goods imported from European countries.
Brussels has strongly opposed the decision, calling the tariffs illegitimate and unjustified. The EU insists that it must protect its businesses. However, Europe is not the only target: Trump has also announced new taxation measures against Mexico and Canada (again).
The decision is final: Donald Trump has set his sights on Europe with a 25% tariff hike affecting multiple sectors. The exact mechanism for implementing these tariffs remains unclear, but the policy direction is unmistakable. According to Trump, the European Union was created to “take advantage of the United States,” and he sees this as the right moment to send a strong and clear message. He claims the U.S. has a trade deficit of “$300 billion” with Europe, though official 2023 figures indicate a much smaller gap of around $50 billion.
The President also argues that Europe has never fully accepted American-made cars or agricultural products and has exploited the U.S. market. It appears that, in this second term, Trump has a very clear—perhaps too clear—idea of how he wants to deal with the rest of the world, especially with countries that he perceives as unfriendly or not sufficiently pro-America.
The EU’s Response
A spokesperson for the European Commission highlighted the EU’s importance to the United States, pointing out that its vast and barrier-free market has facilitated trade and benefited American investments across all 27 member states. The EU remains willing to collaborate with the U.S., but only if Trump refrains from these retaliatory measures. Otherwise, a strong response from Europe is inevitable.
“We will react immediately and firmly against unjustified trade barriers, especially when tariffs are used to challenge legal and non-discriminatory policies,” the Commission stated. The EU is increasingly concerned about an uncertain future and an increasingly tense relationship with the United States.
Many companies already answered: Danish Salling Group, for example, decided to prioritize european products in their supermarkets brands, such like Netto, Bilka and Føtex.
Automotive trade Numbers
In 2023, the European Union exported vehicles worth more than €40 billion to the U.S., accounting for approximately 25% of the EU’s total automotive exports. More than 1.2 million European-made vehicles reached American soil last year.
The most vulnerable players in this trade dispute are the German automotive giants, including Volkswagen Group, Mercedes-Benz, and BMW. These companies are already struggling with uncertainty over the electric vehicle transition. In contrast, American car exports to Europe in 2023 totaled less than €8 billion, indicating a relatively low demand for U.S.-made cars among European consumers.
