The European Union is once again under heavy pressure in the trade dossier with the United States. President Donald Trump has threatened to raise the American import tariff on European cars and trucks to 25 percent as early as the coming days. This puts the European automotive industry, and Germany in particular, back in the firing line.
Meanwhile, Brussels is trying to do two things at once: prevent escalation and make clear that the EU will not allow itself to be endlessly pressured. That creates a difficult balancing act. On the one hand, many member states want to finalize a deal quickly to avoid higher tariffs. On the other hand, resistance is growing in Europe against negotiating under open pressure from Washington.
Trump ramps up pressure at a sensitive moment
The latest threat centers on a trade agreement that the EU and the US set in motion last year. According to Reuters, Trump accuses the EU of not yet having fully implemented its part of that agreement. The United States is said to have largely fulfilled its side, while the European side has faced delays due to internal political debates and additional conditions from the European Parliament.
That is precisely what makes the situation so precarious. The EU is in the middle of its own decision-making process, but Washington is now setting the clock ticking with a concrete tariff threat. As a result, an administratively slow-moving dossier suddenly turns into an acute industrial threat.
Why the automotive industry is hit hardest
The impact of an increase to 25 percent would be significant for European carmakers and their supply chains. On 4 May, Reuters reported that shares of major German automakers such as Porsche, BMW, Mercedes-Benz and Volkswagen came under immediate pressure after Trump's decision to raise the tariff on European car imports. The broader European index for cars and parts also fell.
That makes sense. The automotive industry is not only an export engine, but also a chain of thousands of suppliers, machine builders, materials producers and specialized manufacturing companies. A higher import tariff therefore affects not only the final manufacturer, but also the many industrial players behind it.
Brands with little or no production capacity in the US are especially vulnerable. Reuters cites Audi and Porsche, among others, as examples of brands that could be hit harder because they have less local production to absorb the impact of import tariffs.
Brussels wants a deal, but not at any price
Within Europe, pressure is growing to act quickly. According to Reuters, several EU countries are pushing for a swift completion of the European part of the trade deal to prevent further damage to the industry. German Chancellor Friedrich Merz warned that Germany could be among the hardest-hit countries if the higher tariff goes ahead.
Still, the picture in Brussels is not clear-cut. The European Parliament wants to build in additional safeguards before giving its final approval. According to Reuters, talks between the Parliament and the Council will continue this month, with the aim of finalizing the European legislation surrounding the trade agreement. But it is precisely those extra safeguards that make the dossier slower and more sensitive.
This raises the stakes beyond trade alone. It is also about the question of how far Europe is willing to go when the US directly links political pressure to import tariffs.
The European tone: not getting caught up in the noise
Notably, several European ministers are publicly trying not to escalate tensions further. French Minister Roland Lescure said, according to Reuters, that he wants to look “through the noise” and hopes the United States will ultimately simply stick to the joint process. Dutch Minister Eelco Heinen declined to comment on possible European responses, precisely because speculation could complicate the negotiation process.
This shows how cautious the European line is at the moment. The EU clearly does not want to add fuel to the conflict, but keeps the option open to respond if Washington escalates further. Reuters previously reported that in earlier phases of the conflict the EU prepared countermeasures and, in some cases, even temporarily suspended them pending political developments.
Why this is also relevant for Dutch industry
At first glance, this seems primarily a German problem. But that would be too simplistic. Dutch industry is closely intertwined with European production chains in automotive, machine building, high-tech and materials. If German carmakers come under pressure from higher American tariffs, Dutch suppliers, logistics providers and machine builders will feel it too, through orders, investments and falling demand.
Moreover, such a trade conflict also affects industry indirectly. New tariffs increase uncertainty about exports, pricing, investment decisions and production planning. In a sector where margins are often already under pressure, political noise can quickly filter down to the shop floor.
Not a classic trade war, but a harsh reality check
The current situation above all shows how vulnerable European industry remains to geopolitical pressure from Washington. Even if it does not ultimately come to a full-blown trade war, the message is clear: export-dependent sectors can once again face additional costs and shifting competitive dynamics overnight.
That also makes this issue relevant beyond automotive. Because if the US demonstrates that sector-specific tariffs are once again being used as a political lever, other industrial sectors in Europe will also have to ask themselves how resilient their position really is.
The key question for Brussels and industry
The European Commission and the member states now face a twofold challenge. In the short term, they must try to limit the damage by reaching an agreement or temporary de-escalation. At the same time, Europe must prepare for a scenario in which trade threats become a recurring feature of the transatlantic relationship.
For industry, that means one thing: dependencies are becoming strategic once again. Anyone heavily reliant on exports to the US or on customer segments directly affected by import tariffs will have to reassess their risk profile.
Conclusion
The latest trade threat from Washington is more than a political incident. It strikes at the core of Europe's industrial position. Cars are now in the spotlight, but the underlying message is broader: Europe's industrial competitiveness is increasingly and directly influenced by geopolitics, trade policy and political timing.
Brussels is trying to manage the situation without allowing itself to be held hostage by American pressure. But for industry, what ultimately counts is the outcome. Because if the tariff really does rise to 25 percent, it will be felt not only in the boardrooms of carmakers, but throughout the entire European chain behind them.
FAQ
What exactly is Trump threatening to do?
Trump is threatening to raise the American import tariff on European cars and trucks to 25 percent.
Why is he doing this?
According to Reuters, Trump accuses the EU of not yet having fully implemented its part of an earlier trade agreement.
Which sector is hit hardest?
The European automotive industry is directly in the line of fire, particularly German manufacturers and their supply chains.
Why is this also important for the Netherlands?
Dutch industrial companies often supply European chains in automotive, machine building and high-tech. If those chains come under pressure, it affects orders and investments. This is a reasonable inference based on the European chain structure and the sectors affected.
Is the EU preparing countermeasures?
The EU is above all trying to prevent escalation, but Reuters previously reported that in earlier phases of the conflict Brussels had already prepared or temporarily suspended countermeasures.
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