25% tariff on vehicles: Trump’s revenge in Europe for its conduct in the war

President Trump announced on his social network Truth Social that “based on the fact that the European Union is not complying with all the agreements in the trade agreement, next week I will increase the tariffs imposed on the European Union on cars and trucks coming to the United States. The tariff will be increased to 25%”. Later he mentions and praises the American automobile industry and how much the tariff is expected to strengthen it.

Tensions against Germany

Despite Trump’s announcement that the tax increase is due to European violations of the trade agreement, in Europe it is speculated that the decision depended more on the continent’s lack of cooperation with Iran.

Rotem Org-Klisky, an expert on American politics, explains that “this is mainly the tensions with German Chancellor Friedrich Mertz. Despite Germany’s readiness to increase the defense budget and defend itself, the war with Iran is very unpopular in Germany. Mertz said that Iran ‘humiliates the US’ and ‘the US has no strategy’. This is perceived very badly in the US. Add that to the American frustration with Europe that they are beating them in trade, and for them this is a necessary step.”

European media also strengthen this connection. Euronews cites as context Trump’s statement from Thursday that German Chancellor March should focus on ending the war in Ukraine instead of “intervening in Iran” and cited Italy and Spain as “truly horrible” in this context. The German newspaper inFranken even painted it in harsh words as “revenge” against Mertz, Maloney and Sanchez (from Germany, Italy and Spain respectively) for their lack of cooperation in the war against Iran.

Among other things, the European Union countries refused to participate in the international operation to escort convoys through Hormuz in order to break the Iranian embargo on it, which led the US to change its strategy and impose a counter embargo on Iranian exports.

The damage: hundreds of millions of euros

The new tariff is expected to cost European manufacturers hundreds of millions of euros. When the trade agreement between the US and the European Union was signed, which lowered the tariff from 27.5% at the time to 15%, the European Union estimated the savings for manufacturers between 500 and 600 million euros per year. Now that the tariffs are back at a similar level, it can be assumed that the damage will be similar.

While the EU is “only” the second largest source of imports to the US, the US auto market is so large that the US is the number one export destination for EU car manufacturers. In 2024, vehicles worth a total of €39.8 billion will be exported to the US, with the UK the second most important destination at €34.3 billion.

The biggest victim of the increase in American tariffs is expected to be Germany. The country is the largest car manufacturer in Europe, with several major brands such as Volkswagen, BMW and Mercedes.

In total, the U.S. receives approximately $25 billion worth of vehicles annually from Germany alone. Lower but significant rates also come from other European countries: 6.3 billion from Slovakia, 4 billion from Italy and a similar amount from Sweden. However, most of the major car manufacturers, including the aforementioned 3 German ones, have production sites in the U.S. that are expected to actually benefit from the American tariffs.

At this point, the European Union refuses to commit to a specific response such as the imposition of counter-tariffs on the US, but the European Commission has declared that “all options are open”. In any case, in Europe they are protesting Trump’s framing that the tariff increase stems from a violation of the trade agreement by the continent, and say that the implementation of the agreement by the European Union is “in accordance with accepted legislative practices”.

Bernd Lange, chairman of the trade committee in the European Parliament, put it in harsher words: “President Trump’s behavior is unacceptable. The latest move shows how unreliable the American side is. We have already seen arbitrary attacks by the US in the matter of Greenland, this is no way to treat close partners. Now, we can only respond clearly and firmly” but he also refused to refer to specific measures.

And what about the internal American politics? According to Rotem Org-Klisky “the tariffs in the previous round, around “Liberation Day” in April 2025 (then huge tariffs were announced on a number of countries around the world, by the way) were not very popular, despite Trump’s obsessive preoccupation with the issue. The economic damages were very clear, and this contributed to inflation,” he said, “perhaps there is an attempt to take over the agenda, because Iran and Epstein are currently starring. Maybe it’s an attempt to play the cards, and make sure they talk about anything else.”