The EU and the US have signed a joint statement to retroactively reduce US tariffs on cars and car parts from 27.5% to 15%. The reductions were technically part of an agreement in July, but were never implemented. That will now change.

After weeks of uncertainty following the political agreement between European Commission President Ursula von der Leyen and US President Donald Trump on July 27, the EU and the US have finalized a joint statement on trade and investment.

It confirms a maximum all-inclusive tariff rate of 15% for most EU exports to the US, covering strategic sectors including cars, pharmaceuticals, semiconductors, and lumber.

In the waiting room

For European carmakers, including those that manufacture electric vehicles and their components, the announcement ends weeks of waiting. As mentioned above, their products had not yet benefited from the base tariff reduction agreed upon in July, leaving the US rate for cars at 27.5%, which has been in place since April.

Although the tariff reduction was also supposed to apply to vehicles, the US did not initially implement this part of the agreement. Under the joint statement, Washington will now retroactively apply the 15% ceiling to vehicles and parts from 1 August. However, Trump will only implement the tariff reduction if the EU initiates its own legislative process for easing imports of certain US products.

The 15% tariff on cars only applies to imports from the EU to the US, not vice versa. Vehicles from the United States will soon be able to be imported into the EU duty-free. The EU currently levies a 10% tariff on car imports from the US.

A high-ranking EU official was quoted at the end of July as saying that a rate of 2.5% had already been agreed upon and that the EU was ready to go down to zero percent, provided that the US kept its promise and reduced car tariffs to 15%.

‘A serious, strategic deal’

EU-US trade in goods and services reached €1,600 billion in 2024. By capping tariffs at 15% for vehicles, the joint statement thus provides a more transparent framework for the automotive industry.

EU Trade Commissioner Maroš Sefcovic, who led the negotiations with US Secretary of Commerce Howard Lutnick and US Trade Representative Jamieson Greer, called the outcome a “serious, strategic deal” and underlined that “a wide range of sectors, including strategic industries such as cars, pharmaceuticals, semiconductors, and lumber, stand to benefit from the deal.”

“The alternative, a trade war with sky-high tariffs and political escalation, would harm jobs, growth, and businesses on both sides of the Atlantic.”

However, the joint declaration is not yet legally binding. As German media point out, the EU must be prepared for the possibility that Trump could again unilaterally raise tariffs if the agreements are not implemented. The US did not respond to the EU’s proposal to waive tariffs on industrial goods completely.

Secure supply chains

The joint statement also addresses steel and aluminum, aiming to protect markets from global overcapacity while maintaining secure supply chains through tariff rate quota solutions. These measures are particularly relevant to automotive supply chains that depend on stable access to metals, semiconductors, and chemical precursors.

Von der Leyen highlighted the stability the agreement provides: “The European Union will always pursue the best outcomes for its citizens and businesses. Faced with a challenging situation, we have delivered for our Member States and industry, and restored clarity and coherence to transatlantic trade,” she said.

The European Commission President also emphasised that “this is not the end of the process, we continue to engage with the US to agree more tariff reductions, to identify more areas of cooperation, and to create more economic growth potential.”

In addition to cars, the joint statement introduces a special regime effective from 1 September for several categories, including aircraft and aircraft parts, cork, and generic pharmaceuticals, which will be subject only to ‘Most Favoured Nation tariffs’. Both sides also committed to exploring the inclusion of additional product groups.

Also criticism

The European automotive industry breathes a sigh of relief after the announced agreement, but some instances and groups are less happy with the deal. One thing is sure: the current announced agreement brings assurance and stability after months of uncertainty.

But at what price, some ask. The trade balance between Europe and the United States might be unbalanced in favor of the EU in terms of goods, but it is even more unbalanced in favor of the US in terms of services.

Analysts say that Europe has failed to use this argument at the negotiation table and started with a weakened position. Others question what a deal with the highly unpredictable Trump is worth. They also point out that a lot remains to be discussed and is still unclear.

Environmental and safety standards

The European Commission also said last week that it wants to identify and develop standards with the US, “with a view to making trade across the Atlantic easier.” The potential changes could allow vehicles to be certified for sale in the EU or the US exactly as built, without adaptation to the specific rules and safety standards on both continents.

Many automotive groups in the EU are ringing alarm bells. “Mutual recognition of vehicle standards compromises safety,” says Antonio Avenoso, executive director of the European Transport Safety Council. “Mandates for automated emergency braking, lane-keep assistance, and pedestrian protection, which are not required in the US and for US-made vehicles, make European roads safer,” he adds.

“The European Union has waved the white flag on road safety,” he concludes. “This is not a technical detail; it is a political choice that puts trade convenience ahead of saving lives. US-made heavy pickups and SUVs are out of step with Europe’s vision for safer and more sustainable mobility.”

The prospect of giant gas-guzzling and CO2-spewing American trucks and SUVs entering Europe has also angered many environmental and safety-concerned groups.

“The Commission is pretending that dangerous monster trucks like RAM pickups or Ford F-150s are as safe and clean as, for example, a Fiat 500, said James Nix, vehicle policy manager at the NGO Transport & Environment(T&E), in an e-mail to the news site Automotive News Europe. “If implemented, 20 years of safety, air pollution, and CO2 progress will be killed overnight,” he warns.