For European car manufacturers, the EU-US trade agreement seemed to lock in limited tariffs at 15%. With a wary Parliament and a US threat of 25%, the outcome remains uncertain for the builders.
European manufacturers can breathe a sigh of relief, but the American threat to their cars has not disappeared. In the background, an agreement that was presented as settled is supposed to protect the automobile industry, but it remains fragile. If things go wrong, Washington can quickly raise tariffs on European cars again. For the French driver, this doesn’t affect the price of the Clio tomorrow morning. But this showdown weighs heavily on the future of the major companies that design and produce our models.
This EU-US commercial agreement for automobiles, stemming from the famous Turnberry agreement of 2025, sets a tariff cap. According to the French Directorate General of Customs and Indirect Duties, the US has replaced old automotive tariffs. They went from 25% to an overall capped rate of 15%. The European Union Council confirms that this decrease already applies to European cars and parts. But in the European context, the regulations translating the agreement are still under discussion in Parliament and among member states. This gap is what feeds the nerves of negotiators and the automotive industry.
What the EU-US agreement really foresees for European cars
In July 2025, the Turnberry agreement sealed a political compromise between Washington and Brussels on tariffs. The French customs explain that this compromise sets a maximum rate of 15% on most European products. Cars and automotive parts are clearly included in this tariff framework. Before Turnberry, the US could activate section 232, a mechanism that allowed tariffs of up to 25%. The European Union Council recalls that these special rights targeted European cars. They have been reduced from 27.5% to 15%, retroactively effective from August 1, 2025. On an SUV exported for around €50,000, a 10-point difference represents €5,000 in duties. Depending on the choices of manufacturers, this difference could impact the final price or their margin.
The European statistical office Eurostat measures how important this issue is for the automotive industry of the Old Continent. According to Eurostat, in 2024, the European Union exported €165.2 billion worth of cars. They imported €75.9 billion, resulting in a surplus of €89.3 billion. The US is the largest customer, buying €38.9 billion of European cars in 2024. In other words, a sudden increase in tariffs would first affect European sedans and SUVs sold across the Atlantic. And, as a ripple effect, the factories and subcontractors based in France, Germany, or Spain.
Why the agreement is still not secure
On May 6, 2026, a second trilogue brought together Parliament, member states, and the Commission in Brussels. According to the Greek branch of the news site HuffPost, Bernd Lange spoke of a “good degree of progress.” At the same time, he warned that “there is still a way to go” until a final agreement. The stumbling blocks concern safeguard clauses that Parliament wants to clearly outline. The legislators are demanding a sunrise clause, which would make certain European concessions dependent on the actual lifting of American tariffs. They also want a sunset clause so that without a new political agreement, everything would stop by the end of March 2028. For the automotive industry, these safeguards would prevent making lasting concessions if Washington changes course again.
According to HuffPost, the US Ambassador to the EU relayed a new threat from Donald Trump. If Europe delays implementing the agreement, tariffs on European cars could quickly rise back to 25%. For premium German manufacturers or certain European SUVs, the loss of competitiveness would be immediate. They would either have to further raise prices for American customers or significantly reduce their margins. In the short term, the French driver won’t see their next minivan affected by this agreement. The same goes for most family SUVs sold and produced in Europe for the domestic market.
The real risk lies behind the scenes, affecting the financial balance of groups investing in European plants. For the employees in the industry, the 2028 date remains a key point of vigilance. If the agreement expires without a safety net, a return of American tariffs would be harsh for the industry.
