When President Donald Trump struck a trade deal with the European Union in July, officials from both sides emphasized how the agreement would ensure the long-term stability of transatlantic trade.
The Trump administration has called the deal “a generational modernization of the transatlantic alliance.” European Commission President Ursula von der Leyen said it would “restore stability and predictability” by locking in 15% tariffs on most European goods exported to the United States, while most U.S. imports into Europe would be exempt from tariffs.
In other words, Trump got what he wanted from the deal: lower tariffs on U.S. exports and the establishment of new permanent baseline tariffs on European goods. European leaders also feel like they’ve won something: 15% tariffs are lower than the 25% tariffs Trump threatened, and the deal will prevent Trump from raising tariffs the next time he’s in a bad mood.
That’s all.
On Friday, Trump announced that he would increase tariffs on European-made cars to 25%. (These tariffs are authorized under Section 232 of the Trade Expansion Act of 1962 and are therefore not affected by the Supreme Court’s February ruling that limited some of the president’s power to unilaterally impose tariffs.)
These higher tariffs could cost automakers $4 billion this year.
In an article published in “Truth Social”, Trump said that the tariff increase was in response to the EU’s “non-compliance with the trade agreement to which we fully agreed.”
However, the trade deal has not yet been fully agreed, so it is difficult to understand how the Europeans could break it. The EU is still in the process of ratifying it — though it cleared major legislative hurdles in March — and the Trump administration has not even asked Congress to approve it. To add to the confusion, European trade officials visited the White House a few weeks ago and everyone seemed to be getting along. After that meeting, the United States and the European Union announced a new joint partnership on a number of strategically important minerals.
Trump’s sudden decision to raise tariffs now puts the entire deal at risk and has once again heightened tensions with Europe.
Bernd Lange, chairman of the European Parliament’s International Trade Committee, wrote on Twitter that Trump’s sudden increase in tariffs was “unacceptable.”
“Trust is good, but only clear rules can combat arbitrariness,” he added.
He is right. Friday’s statement once again showed that Trump cannot be trusted by any trading partner. The President’s words are virtually worthless and his “deal” could change at any time for any reason. Who would enter into serious negotiations with such a person?
Convincing other countries to negotiate better trade terms with the United States is a core promise of Trump’s tariff regime. But this new dispute over imported cars shows that Trump still doesn’t understand why trade deals are so important.
The focus of trade deals is to provide stability for individuals and businesses to plan transactions and capital investments. A 15% tariff is costly, but a 15% tariff could rise to 25% (or higher) in an instant, with consequences that would go far beyond raising taxes.
That means Trump’s threats to undermine EU trade deals also undermine the ability of private citizens and businesses in other parts of the world to invest in the United States.
Jennifer Safavian, chief executive of industry group Autos Drive America, told The Associated Press that higher tariffs would “threaten the progress made in opening up EU markets and growing the U.S. auto industry.”
The tariffs would be another blow to the auto industry, which is already reeling from U.S. tariffs on steel and aluminum and the ongoing costs of Trump’s illegal war with Iran. Aluminum prices are up 90% from a year ago due to tariffs and the closure of the Strait of Hormuz, wall street journal Report.
It’s unclear what Trump hopes to achieve by imposing higher tariffs on European cars. In fact, we don’t even know why he made this decision.
Regardless, a trade “deal” that can be easily torn up by one person isn’t really a trade deal at all. That’s why Congress must strip the president of his power over tariffs.
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