President Donald Trump has announced a 25% tariff on imported cars, alongside new duties on semiconductors and pharmaceuticals, marking a significant shift in US trade policy. The measure, aimed at reshaping America’s trade relationships, has sparked concern among industry leaders and international partners, particularly the European Union.
The decision has drawn sharp warnings from major automakers, with Ford CEO Jim Farley cautioning that the tariffs could cause unprecedented disruption in the US auto industry. Meanwhile, EU trade commissioner Maroš Šefčovič has travelled to Washington for urgent talks as tensions escalate.
Trump’s tariff policy and economic consequences
Trump confirmed that automotive tariffs would be set at 25%, arguing that foreign manufacturers have benefited from what he describes as unfair trade practices. According to the White House, similar 25% tariffs on semiconductor chips and pharmaceuticals will be introduced, with the potential for further increases over time.
The move targets countries that Trump has long accused of hurting American manufacturers, particularly EU nations, Mexico, and Canada.
The European Union currently imposes a 10% tariff on imported vehicles, while the US tariff rate has stood at 2.5% for passenger cars. Trump has repeatedly criticised this disparity, stating that the US “has been taken advantage of” in trade deals.
However, industry leaders have sounded the alarm over the impact of these tariffs. Ford CEO Jim Farley has warned that applying a 25% tariff to imports from Mexico and Canada would “blow a hole in the US industry that we have never seen.”
Many US-based manufacturers depend on international supply chains, and increasing tariffs could significantly raise costs and disrupt production.
Despite these warnings, Trump remains confident that the tariffs will push automakers and tech companies to increase domestic production. He has suggested that major corporations will soon announce new investments in US manufacturing facilities.
EU reacts as trade tensions escalate
In response to Trump’s announcement, the European Commission has denied claims that Brussels has agreed to reduce car import tariffs. According to an official statement, “No specific offer on reducing tariffs has been made by either side.” EU officials insist that any trade adjustments must be mutually beneficial and negotiated within a rules-based framework.
The arrival of EU trade commissioner Maroš Šefčovič in Washington underscores European concerns over worsening trade relations. EU leaders fear that escalating tariffs will harm businesses on both sides of the Atlantic, particularly in automotive manufacturing and semiconductor production.
Trump has also taken aim at the UK, stating that while London is “out of line” on trade issues, the dispute is more manageable than his ongoing standoff with the EU. He has strongly criticised European trade policies, calling them an “atrocity” and accusing the bloc of restricting US exports in agriculture and industrial goods.
