The United States struck first. Europe’s response was to negotiate. That was the first reaction of the European Union to the 25% tariffs imposed by Donald Trump’s Government on cars, the parts that make them up, steel and aluminum. Also to the 20% tariff in flat rate format that the United States imposed on all European Union countries in April 2025 when a trade war broke out that is still ongoing.
Faced with the American attack, the first thing the European Union did was negotiate. Logical if we take into account that Europe is risking the future of many sectors, but the automobile is especially critical. According to UGTOn average in Europe, 3.2% of employees in each country work in the production of vehicles and engines or in activities associated with them such as repair or distribution and sales.
The document mentions the Draghi Reportthe result of a study commissioned by the European Union from the former president of the European Central Bank to seek solutions to the European economic decline in the face of emerging powers. It noted that in Europe there are 13.8 million people working in the automobile sector, representing 6.1% of the active population.
According to the European CommissionIn 2025, vehicles worth 38.9 billion euros were exported to the United States. Only the United Kingdom, which bought cars worth 34.3 billion euros, rivals this country. To this we must add that many European vehicle manufacturers produce in Mexico or Canada as bridges to cheaper entry into the United States.
The result was immediate. The Group Volkswagen stopped its deliveries in the United States and its shipments by rail from Mexico. Mercedes considered reduce your offereliminating the smallest models that report the lowest profit margin. BMW chose to absorb the tariffs softening the blow as best as possible. And Stellantis sent home to workers inside and outside the United States to produce fewer cars.
Finally, an agreement was reached whereby European cars would pay 15% in the United States while a red carpet was laid out in the opposite direction. It wasn’t coincidence.
An impossible response proposal
As we say, in search of a solution, the European Union put on the table a non-existent tariff for cars arriving from the United States. In The World they collected the words of Ursula von der Leyenpresident of the European Commission, recalling that this same proposal had already been put on the table two months before.
However, the European Commission stressed that they did not receive an adequate response then. And the same thing ended up happening two months later. In April 2025, Donald Trump went before the cameras to threaten China with raising tariffs even further and to indicate that he is not convinced by the European proposal.
For the president of the United States, it was not enough. “The EU has been very tough over the years. I always say that it was formed to hurt the United States in trade. That is the reason why it was formed (…) They came together to create a monopoly situation, to create a unified force against the United States in trade. (…) We pay for them to protect them militarily and they play us in trade. So it is not a good combination,” he stressed in words collected by The Country.
The problem for Europe is that the trade deficit of the United States with Europe in the purchase and sale of cars was and continues to be very high. And the North American Government is not willing to accept that Europe compensates part of these losses (and other products sold to the United States) with services. Despite everything, the balance remains positive for Europe, as seen in this graph of elDiario.es.
According to ACEA15% of the vehicles exported by Europe are destined for the United States. However, the value is high because 22% of the money made from exports to the entire world comes from the United States. Those 38.5 billion euros contrast with the 7.7 billion euros that we import from the country.
By units, Europe had shipped 749,170 light cars to the United States the previous year, while we had purchased 164,857 vehicles. On average, a car sold to the United States costs about 51,400 euros. Back, each car sold by the United States to Europe costs about 46,800 euros.
This explains to us that if the United States only wants a balanced trade balance between entry and exit of vehicles, it is almost impossible to achieve.
But there are many reasons why Europe cannot match the sales that the United States makes of our cars. Firstly, due to a purely cultural problem, the United States does not manufacture cars that fit the European philosophy. In general, they manufacture extremely large cars for European cities, with larger and more fuel-efficient engines than European ones.
And not only that, the United States has encountered the problem that a large part of the automobile manufacturing industry has left the country to locate in Mexico and Canada. Trade agreements with these countries allow them to sell cars “American style” by producing them cheaper than within their borders.
Europe has been finding a productive market for each car. Those with a higher cost (but a higher profit margin) are manufactured, above all, in Germany and France where costs are higher. The smallest ones are produced in Spain or in countries with lax trade agreements such as Morocco or Türkiye. Only within its borders (Germany and Poland) do distortions occur, such as that between the United States and Mexico and Canada.
The problem for the United States is that the Europeans do manufacture cars that are of interest there, sending them from Europe or from Mexico and Canada, but they also already manufacture the cars that the Europeans themselves are interested in. The United States manufactures a type of vehicle that is little in demand in Europe and, in fact, brands like Ford have been manufacturing the vehicles that interest us most locally for decades. What has the Ford Fiesta been like?the Focus, the Puma or the Kuga, among many others.
In fact, Ford itself is clear that the place for produce the few Ford Mustangs or Ford Broncos it sells in Europe it is in the United States. And the emissions regulations that Europe has on the horizon are only pushing for these types of cars to arrive in dribs and drabs. A Ford Mustang with a V8 engine approves 279 gr/km of Co2. For every car of this type sold in Europe, Ford you will need to sell three electric cars if you want to escape fines from 2027.
If we add to this that The United States has withdrawn pollution emission limitationswe are facing a more polarized market where cars have to be manufactured specifically for each market. And, there, the competitiveness of American firms is further reduced when they want to bring their cars to the European Union.
Back to square one
Despite last year’s negotiations, on May 1, 2026, Donald Trump appeared to announce that raised tariffs on European cars by 25% again because, he assures, the European Union has not fulfilled its part of the deal reached the previous year. In his press conference, however, he did not offer details of what these breaches were.
The decision is a more problem for a European industry that already suffered last year and that it is facing Chinese competition on its own territory. Especially the German companies and Stellantis, which sell the most cars in the United States, are the ones that have been most affected if we talk about Europe. But also toyota and Sling have weighed down the harsh tariffs imposed by the country.
And if the large manufacturers have not felt the impact on their sales in the United States, it is because they have preferred to absorb the price increase and reflect the millions lost in their income statements. The benefits of Porsche (that all its cars sold in the United States arrive from outside the country) were reduced by 91% as a consequence of tariffs and a very sharp drop in sales in China. A similar situation is going through the entire Volkswagen Group. And Germany, with the 2024 data that They are the last ones availablewas the world’s fifth largest car exporter to the United States and manufactures many of its cars in Canada and Mexico.
Stellantis, even, has redesigned its strategy for the remainder of the decadefocusing the shot in the United States on local companies and stopping, for example, the deployment of Alfa Romeo in the country. An example of that multipolarized world that we talked about before.
A version of this article was published in April 2025
Photo | Ford and Sara Kurfess
GIPHY App Key not set. Please check settings