The European Union and the United States have agreed to retroactively reduce U.S. tariffs on cars and car parts from 27.5% to 15%, a move that ends weeks of uncertainty for European automakers but remains contingent on reciprocal tariff cuts from Brussels.
The reductions, initially agreed in July but never implemented, will now apply retroactively from Aug. 1. The U.S. decision covers strategic industries including cars, pharmaceuticals, semiconductors and lumber. In return, the EU is expected to initiate its own legislative process to ease imports of selected U.S. goods.
EU Trade Commissioner Maroš Šefčovič, who led negotiations with U.S. Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer, called the outcome a “serious, strategic deal” and said it would benefit “a wide range of sectors, including strategic industries such as cars, pharmaceuticals, semiconductors, and lumber. The alternative – a trade war with sky-high tariffs and political escalation – would harm jobs, growth, and businesses on both sides of the Atlantic.”
European Commission President Ursula von der Leyen said the agreement restored clarity for industry. “The European Union will always pursue the best outcomes for its citizens and businesses. Faced with a challenging situation, we have delivered for our Member States and industry, and restored clarity and coherence to transatlantic trade,” she said.
The 15% tariff ceiling applies only to EU exports to the U.S. Cars from the U.S. will soon be able to enter the EU duty-free, down from the current 10% rate. A senior EU official previously said Brussels was ready to cut rates to zero if Washington upheld its commitment.
Trade in goods and services between the EU and U.S. reached €1.6 trillion in 2024, with the automotive sector a central pillar. The joint statement also included provisions on steel and aluminium, aiming to manage overcapacity and secure supply chains with tariff-rate quotas.
The deal is not yet legally binding. German media noted the EU must prepare for the possibility that tariffs could be unilaterally raised again by Washington if implementation falters. The U.S. has also not responded to Brussels’ proposal for a complete waiver of tariffs on industrial goods.
A special tariff regime will take effect from Sept. 1 for aircraft, cork, and generic pharmaceuticals, which will be subject only to Most Favoured Nation tariffs. Both sides also pledged to explore expanding the scope of tariff reductions to additional product groups.
Source: whitehouse.gov, europa.eu
