US-EU Trade Deal: EU's Non-Compliance Leads to Tariffs

BRUSSELS — U.S. President Donald Trump recently announced that he would reimpose higher tariffs on EU-made automobiles and trucks from 15 percent to 25 percent. Of course, the usual chorus of critics cried “protectionism” and “trade war.” But this was not an escalation for its own sake. It was a consequence of the EU dragging its feet for months as it enjoyed the benefits of a U.S.-EU trade deal it agreed to without delivering its side of the bargain.

At the beginning of Trump’s second term, the U.S. faced a lopsided trade relationship with the EU. American exporters confronted high-tariff and non-tariff trade barriers in sectors from agriculture to digital services, while European cars, machinery, pharmaceuticals, wines, meats, cheeses and luxury goods flowed into the American market having to pay relatively low duties. The result was a 2024 trade-in-goods deficit of more than $235 billion in favor of the EU.

So, in March 2025, Trump imposed a 25 percent tariff on imports of automobiles, including those from the EU. Combined with a Most Favored Nation tariff, the effective tariff rate on autos manufactured in the EU was 27.5 percent. By May 2025, negotiations with the EU were “going nowhere,” Trump said, so he recommended a straight 50 percent tariff on all EU goods beginning June 1.

European Commission President Ursula von der Leyen requested an extension to July 9 of that year, vowing that “Europe is ready to advance talks swiftly and decisively.” Trump stated it was his “privilege to do so,” only to have the EU fail to meet its own deadline. On July 11, Trump sent a letter to von der Leyen stating that as of Aug. 1, the U.S. tariff on EU goods would increase to 30 percent.

On July 27, 2025, Trump and von der Leyen struck a political-level deal (the so-called Turnberry Agreement). Negotiators from both sides sat down in earnest and on Aug. 21 announced a Framework on an Agreement on Reciprocal, Fair, and Balanced Trade. They said they shared a “joint determination to resolve our trade imbalances and unleash the full potential of our combined economic power.” Under the terms of the framework deal, the U.S. agreed to impose a 15 percent tariff on imports of European cars, pharmaceuticals and other products, while the EU agreed to “eliminate tariffs on all U.S. industrial goods.” The parties also committed “to work together to reduce or eliminate non-tariff barriers” to trade.

Within weeks, the Trump administration implemented U.S. tariff commitments at the negotiated 15 percent rate on the vast majority of EU imports — including automobiles and automobile parts. The White House made clear that full implementation depended on reciprocal action from Brussels.

Alas, that never happened.

Instead, the EU has yet to implement a single tariff reduction despite benefiting from lower U.S. tariffs, including the lower tariff on EU autos, for the past nine months.

Adding insult to injury, instead of approving the deal as negotiated, the European Parliament is now trying to rewrite it by tacking on four new amendments. These changes would include sunrise and sunset clauses, suspension mechanisms and safeguards that were never part of the original Turnberry deal.

In plain English, Brussels is trying to move the goalposts while the game is underway.

That’s not how reciprocal trade deals work. Reciprocity means both sides deliver what they promise. It does not mean one side delivers, while the other stalls, delays and reserves the right to add new demands whenever it suits. Nor is that how allies are treated.

The EU’s commitments are clear: zero percent tariffs on all U.S. industrial exports; duty-free quotas for key U.S. agricultural goods; and changes and flexibilities for the U.S. on burdensome regulations that in some instances discriminate against American companies. The EU has not complied with all of these commitments, and if a deal is a deal, we expect that it will do so in every particular, which will put our trade relationship on a stable growth trajectory for the future.

Trump has seen enough. On May 1 he announced the targeted reimposition of 25 percent tariffs on passenger cars and light trucks imported from the EU because the EU “is not complying with our fully agreed to Trade deal.” The action was narrow, surgical and proportionate. It would apply only to finished vehicles, not to parts or to cars assembled in American plants by European companies.

On May 7, after “a great call” with von der Leyen, Trump agreed to extend the date for reimposing auto tariffs to July 4. While the prospects for a deal certainly look better after their call, all eyes will be on what comes out of the trilogues. But Trump’s message remained unmistakable: The U.S. will honor the Framework Agreement when our partner does the same. Otherwise, we will protect our workers and industries.

Rather than an effort to instigate a trade war, the auto tariffs represent the overdue enforcement of a trade peace with which the EU itself has so far failed to comply — and may yet try to change. Trump has repeatedly demonstrated he prefers a deal to a dispute — and we have a deal. The EU still has time to choose cooperation over confrontation. We sincerely hope that it will.