U.S. President Donald Trump said on Friday he would increase tariffs on cars and trucks from the European Union to 25%, saying the bloc had not complied with its trade deal with Washington.
"Based on the fact the European Union is not complying with our fully agreed to Trade Deal, next week I will be increasing Tariffs charged to the European Union for Cars and Trucks coming into the United States," he wrote in a social media post.
"It is fully understood and agreed that, if they produce Cars and Trucks in U.S.A. Plants, there will be NO TARIFF."
Trump told reporters at the White House the higher tariff would force European car makers to move their factory production to the U.S. more quickly.
"We have a trade deal with the European Union. They were not adhering to it. So I raised the tariffs on cars and trucks to 25%, that's billions of dollars coming into the United States, and it forces them to move their factory production much faster."
SLOW IMPLEMENTATION
The Trump administration last year imposed a 25% tariff on global automotive imports under a national security trade law, but reached a deal with the EU in August to lower those duties to a net 15%, inclusive of prior duties.
In exchange, the EU agreed to eliminate duties on U.S. industrial goods, including autos, and accept U.S. safety and emissions standards on vehicles.
Although EU lawmakers advanced legislation in March to implement the tariff reductions, the process is not expected to be completed before June, as EU governments and the European Parliament negotiate final texts.
"President Trump's behavior is unacceptable," Bernd Lange, the chair of the European Parliament's international trade committee, told Reuters.
"This latest move demonstrates just how unreliable the U.S. side is. We have already witnessed these arbitrary attacks from the U.S. in the case of Greenland; this is no way to treat close partners. Now we can only respond with the utmost clarity and firmness, drawing on the strength of our position," Lange said.
But a Trump administration official, asked to explain Trump's move, said: "The EU has not complied with the autos deal after eight months."
Shares of Ford Motor (F.N) fell 2% after Trump's announcement, while those of Stellantis were down 1.7%. General Motors shares (GM.N) dropped 1.1%.
Ryan Majerus, a former senior U.S. Commerce Department official who is now a partner with King & Spalding, said the president's move also may be related to Trump's frustration that some European countries had balked at supporting the U.S.-Israeli war against Iran.
"This is not going to sit well in the EU, and I'm not sure the administration cares, because they're so incredibly antagonistic toward the EU," Majerus said.
