After months of threats, the White House unveiled plans on Wednesday to impose tariffs on automobiles imported to the United States, a plan that is likely to hit car companies across the European Union hard.
The move — which would place a 25 percent tariff on all cars not built in the United States — could ramp up pressure on Europe to respond with countermeasures.
European Union officials have already announced plans to allow tariffs that were instituted during President Trump’s first term to snap back into place, and have said they will place a new set of tariffs on a wide variety of American goods — from lingerie to soy products — by mid-April.
But those measures were a response to steel and aluminum tariffs. And their first wave, meant to hit American whiskey and motorcycles, was delayed to allow for more negotiating time and over fears of a stark American response that could crush European wine and Champagne exports.
The latest U.S. move may intensify the urgency for the European Union to retaliate. Automotive tariffs could squeeze an industry that is already vulnerable — especially in Europe’s biggest economy, Germany, which sends American consumers cars from companies like Volkswagen, Mercedes-Benz and BMW. That makes the tariffs a serious escalation in a trade war that has already left Europe scrambling.
“We will need to assess the action taken by the U.S. and keep a flexible approach so as to calibrate our response accordingly,” Maros Sefcovic, the trade commissioner for the European Commission, the executive arm of the European Union, said in a recent speech.
The United States is the European Union’s largest export market for cars, accounting for nearly a quarter of all its exported vehicles.
In 2024, European automakers sent 38.4 million euros’ worth of cars across the Atlantic, down 4.6 percent from the previous year, according to the European automobile makers association, ACEA.
Auto tariffs “will definitely be a big bummer for the recently returned optimism in Europe,” said Carsten Brzeski, the global head of macro for ING Research. In particular, they could “hurt German exports and increase chances of a continued stagnation.”
The biggest three German carmakers make up about 73 percent of the European Union’s automotive exports to the United States, according to the research firm JATO Dynamics.
And the United States is the most important export market for Germany’s auto industry. Nearly one of every three Porsches is exported to the United States, while one of every six BMWs is shipped there. Mercedes, Volkswagen and Audi (a subsidiary of the Volkswagen Group) have production sites in the United States and Mexico, but they would be hard hit by the increase in tariffs.
BMW warned this month that it expected that the growing trade conflicts would cost the company $1 billion this year.
“If you overdo it with tariffs, it sends a negative spiral to all market participants,” Oliver Zipse, the chairman of BMW, told Bloomberg. There are “no winners in that game.”
Cars are just one sector facing steep tariff increases. On top of the tariffs on steel and aluminum, the United States is planning to announce what the administration calls “reciprocal” tariffs next Wednesday.
The goal of those, the administration says, is to equalize tariff rates between various nations and America.
Mr. Sefcovic, the E.U. trade commissioner, and Bjoern Seibert, the head of cabinet for the commission’s president, visited Washington on Tuesday to talk to their American counterparts — Howard Lutnick, the commerce secretary, and Jamieson Greer, the U.S. trade representative.
On Wednesday, European ambassadors heard an account of those meetings, according to three diplomats who spoke on condition of anonymity because the talks were private.
The takeaway was that reciprocal tariffs could be in the double digits, two of the diplomats said — perhaps even 20 percent or higher, one added, though the figure was uncertain. The tariffs would apply across the board for E.U. countries.
Although the European Union has a relatively low tariff rate on average, the United States has signaled that it will take other factors into account when calculating reciprocal tariffs — including value-added taxes. Those are consumption taxes added to a good or service at each stage of production, and they are given back to the exporter if a product is exported. Mr. Trump has been a longtime critic of those policies.
“The EU’s priority is a fair, balanced deal instead of unjustified tariffs,” Mr. Sefcovic said on X after his meetings this week. “We share the goal of industrial strength on both sides.”
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