Europe: Tariffs on US Cars Could Come if Trade War Doesn’t End

The European Union (EU) is threatening to tariff American car exports if trade negotiations fail.

As the Financial Times (FT) reported on Thursday (May 8), the tariffs on 95 billion euros ($107 billion) of exports, including cars and vehicle parts, would likely take effect in July if the European Commission (EC) can’t convince the U.S. to lift tariffs on 380 billion euros ($428 billion) on goods from the EU. The EC has also said it would issue a dispute with the World Trade Organization if the U.S. does not lower its tariffs.

The standoff comes a little more than a month after President Donald Trump instituted “reciprocal” tariffs of 20% on nearly all EU exports, later reducing these levies to 10% for 90 days to allow time for negotiating.

Senior officials at the EC, which oversees EU trade policy, warned on Thursday that they expected the tariff dispute to “persist over time.”

“We’re not pursuing a dollar for dollar, euro for euro approach” but would rather have “sustainable” measures in the event U.S. tariffs last well beyond the 90-day truce for talks, officials said, per the FT.

Meanwhile, PYMNTS wrote earlier this week that the tariffs are leading retailers and brands in both the U.S. and abroad to prepare for a turbulent second half of the year, as the levies affect everything from sourcing to pricing strategies to customer behavior.

“More expensive is where this is headed,” Kristin Savilia, CEO at Joor, a digital wholesale platform connecting over 14,000 brands with 600,000 buyers worldwide, said in an interview with PYMNTS CEO Karen Webster.

Joor’s data predicts an industry-wide price increase of 20% on average, with 85% of brands and retailers saying they will pass all or most of that cost onto consumers.

“They’re not trying to take advantage of people at all,” Savilia said. “They’re trying to survive.”

The latest round of tariffs, which were steep and sudden, have not only brought about pricing issues, but also present a structural challenge with no easy fix for industries such as fashion.

“One brand I spoke to, 90% of their production is in China,” Savilia said. “They start off behind the eight ball.”

For these businesses, that report noted, rerouting their supply chain is not just costly. It is almost operationally impossible in the short term.