This New Trade Surprise Might Disrupt Decades-Long Global Auto Manufacturing Relationships | Carscoops

      EU nations believed they were nearing a 10 percent agreement similar to that of the UK, but are now confronted with a 30 percent tariff.

      President Trump has announced that goods imported from the EU and Mexico will be subject to a 30 percent tariff, effective August 1.

      The EU’s trade commissioner has warned that this rate would make trade between the EU and the US “almost impossible.”

      Car manufacturers on both sides of the Atlantic are in turmoil following Trump's sudden declaration, which threatens to disrupt international trade. The new 30 percent tariff on goods entering the U.S. from both Mexico and the European Union is set to be implemented on August 1.

      The announcement was made via Trump's Truth Social account, after weeks of stalled negotiations among the three parties.

      Trade tensions are severely impacting European carmakers.

      The EU’s trade commissioner, Maros Sefcovic, remarked that the 30 percent tariff would “practically prohibit” trade between the EU and the US, making it “almost impossible to continue.” Sefcovic had previously believed that an agreement was close, with European countries hoping for a deal matching the UK’s 10 percent tariff (which applies only to the first 100,000 imported cars) established with Trump.

      Even the proposed 10 percent tariff was expected to be challenging for European carmakers, who previously faced a 2.5 percent rate and now contend with a 25 percent surcharge. A shift to a 30 percent rate would be devastating.

      In a letter to European Commission President Ursula von der Leyen, Trump insisted that the EU must “allow complete, open market access to the United States, without imposing tariffs, in an effort to reduce the substantial trade deficit.”

      Mexico is also grappling with the implications of this new tariff rate. Like the EU, Mexico houses numerous car manufacturing plants—some operated by U.S. companies—that export vehicles to the U.S. Certain vehicles produced in Mexico, including the Nissan Sentra, were already under consideration for production relocation to the U.S. prior to Trump’s recent tariff announcement.

      Trump has claimed that Mexico has not taken sufficient action to curb the influx of fentanyl crossing the border.

      In light of this, Canadian businesses facing an even harsher 35 percent tariff will find little solace, as they too rely on trade with the U.S., making Canada America’s largest trading partner.

      Both the EU and Mexico have two weeks to negotiate a deal with the U.S. to avoid the implementation of the new tariffs, but it remains uncertain whether an agreement that satisfies all parties can be reached.