New Citroen C5 Aircross vehicles on a Stellantis production line of the Stellantis carmaker plant in Chartres-de-Bretagne, France, this month.DAMIEN MEYER/AFP/Getty Images
Global auto industry representatives are warning about the negative impact of a trade deal between the European Union and the United States ahead of the Aug. 1 deadline for an agreement between Canada and the U.S.
U.S. President Donald Trump and European Commission President Ursula von der Leyen said on Sunday U.S. importers will pay 15-per-cent tariffs on EU cars and other goods while Europeans will invest US$600-billion in the U.S. and purchase U.S. energy and military equipment. They did not provide details.
The tariff rate is lower than the 30-per-cent Mr. Trump threatened but far above the 2.5-per-cent duty on EU-made cars prior to his taking office this year.
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U.S.-made cars, currently facing 10-per-cent duties in Europe, will be spared tariffs under the deal that goes into effect on Friday. European steel remains tariffed at 50 per cent.
Mr. Trump last week reached a similar tariff deal with Japan, prompting complaints about unfair treatment from U.S.-based carmakers, which pay 25-per-cent tariffs on the non-U.S. content of vehicles imported from their plants in Canada and Mexico.
The American Automotive Policy Council, which represents Ford Motor Co. F-N, General Motors Co. GM-N and Stellantis NV STLA-N, has issued similar complaints about the 10-per-cent tariff Mr. Trump imposed on British-made cars.
David Adams, head of Global Automakers of Canada, said the EU and Japan tariff rates signal a disparity in the way Canada-based automakers are being treated by the U.S.
“It kind of doesn’t make a lot of sense when 50 per cent of the value of Canadian-built vehicles is American content,” said Mr. Adams, who represents Canada’s largest automakers, Toyota Motor Corp. TM-N and Honda Motor Co. Ltd. HMC-N, and several overseas brands.
The U.S. struck a framework trade agreement with the EU on Sunday, imposing a 15-per-cent import tariff on most EU goods.
Reuters
Vehicles made outside North America have almost no U.S. content and create few jobs.
Prime Minister Mark Carney said on Monday he will only sign a trade agreement with the U.S. that is the “right deal” but that some tariffs are likely.
North American automakers say no tariffs are acceptable on the cars they produce in an integrated supply chain governed by the U.S.-Mexico-Canada Agreement, a tariff-free deal signed by Mr. Trump in his first term.
Mr. Adams said Mr. Carney is in a tough spot – pushing to restore free trade while other trading partners are reaching deals with the U.S.
Sigrid de Vries, director-general of the European Automobile Manufacturers’ Association, said on Monday the EU agreement eases the uncertainty over trade but is not healthy for the industry on either side of the Atlantic Ocean.
“The U.S. will retain higher tariffs on automobiles and automotive parts, and this will continue to have a negative impact not just for industry in the EU but also in the U.S.,” Ms. de Vries said in a statement.
“The EU and the U.S. should focus on reducing obstacles to vital transatlantic automotive trade, paving the way for stronger economic ties and shared prosperity.”
The group, which represents 16 major vehicle makers in Europe including BMW, Ford and Toyota, said it will assess the impact on manufacturing in the region when details become available.
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Hildegard Muller, head of the German Association of the Automotive Industry, speaking on behalf of hundreds of carmakers and parts suppliers, said in a statement the EU-U.S. deal will cost the industry in Germany billions of dollars.
“It is of great importance that the automotive supply chains, which have been distorted and restricted by the tariff dispute, work smoothly again,” she said, calling for North America – the U.S., Canada and Mexico – to restore its continental automotive free trade agreement.
“This is particularly important for the supplier industry,” Ms. Muller said.
The U.S. is the second-biggest market for European vehicles after Britain, accounting for 22 per cent of total production in 2024, according to the European Automobile Manufacturers’ Association.
Europe exported 750,000 cars to the U.S. in 2024, 15 per cent of which were battery electric. The U.S. shipped 165,000 cars to the EU.
Canada is the largest market for U.S. cars, exceeding Germany, Mexico and China combined, according to the Canadian Vehicle Manufacturers’ Association.
Canada has responded to Mr. Trump’s tariff war by imposing 25-per-cent tariffs on U.S.-made cars, but spared those made by manufacturers that maintain Canadian production.
Ontario is home to several auto plants owned by Toyota, Honda, Ford, GM and Stellantis.
Since Mr. Trump imposed tariffs in April, there have been thousands of layoffs and lost production. GM and Honda have shifted some production to dodge the tariffs, which amount to about 12.5 per cent after U.S. content is subtracted.