Automotive News Europe — 2025-07-12
News from Brussels
President Donald Trump unleashed his latest tariff ultimatums, declaring a 30 percent rate for Mexico and the European Union, as his trade agenda continues to keep allies off balance and inject uncertainty into global financial markets.
Trump made the announcement in two letters posted to social media July 12 as he informed key trading partners of new rates that will kick in on Aug. 1 if they cannot negotiate better terms.
He has spent the week sending out letters to countries, tweaking his proposed tariff levels from April and inviting trading partners to negotiate further.
The EU had been hoping to conclude a tentative deal with the U.S. to stave off higher tariffs, but Trump’s letter punctured the recent optimism in Brussels over the prospects for an 11th-hour agreement between the major economies.
Trump did, however, leave an opening for additional adjustments.
“If you wish to open your heretofore closed Trading Market to the United States, and eliminate your Tariff, and Non-Tariff, Policy and Trade Barriers, we will, perhaps, consider an adjustment to this letter,” Trump wrote.
The tariff rates would apply widely, though separate from the president’s sectoral tariffs on products such as automobiles and steel. If implemented, it could place the EU at a competitive disadvantage on American exports to the neighboring U.K., which left the bloc in 2020 and was the first country to come to a top-line trade pact with Trump.
Trump made no mention of special treatment for autos exported to the U.S. from the EU.
EU auto tariffs remain at 27.5% for now
Germany’s VDA auto association said there was still no solution to easing the current 27.5 percent tariffs on EU car imports to the U.S., which remain in force.
“It is regrettable that there is a threat of a further escalation of the trade conflict,” said VDA President Hildegard Mueller. “The costs for our companies are already in the billions and the sum is growing every day,” she said, noting that suppliers were also significantly affected by the import duties.
European automakers still hope the U.S. and the EU can reach an agreement to lower auto import tariffs, potentially including a so-called “netting mechanism” to offset imports with exports.
BMW CEO Oliver Zipse told journalists at a company event in Munich on July 11: “I’m optimistic that there will be a manageable outcome but we have to wait for the result.”
BMW would benefit from a netting mechanism arrangement because its largest production site is in Spartanburg, South Carolina.
The mechanism could be based on the value of exports out of the U.S. market — more than $10 billion in 2024 in BMW’s case — rather than the number of exported vehicles, Zipse said.
“We have an important point because we are the largest car exporter in the U.S.” he said, referring to the 225,000 cars it exported out of the country in 2024.
If both sides were to agree on such a mechanism, it could also benefit imports of auto parts, according to people familiar with the matter.
EU pauses countermeasures for further talks
After Trump’s 30 percent tariff threat, European Commission chief Ursula von der Leyen said the bloc will extend the suspension of trade countermeasures against the U.S. until Aug. 1 to allow for further talks. The measures had been adopted in response to tariffs imposed earlier by Trump on steel and aluminum.
“At the same time, we will continue to prepare further countermeasures so we are fully prepared,” von der Leyen told reporters in Brussels on July 13, while reiterating the EU’s preference for a “negotiated solution.”
The current list of countermeasures would hit about €21 billion ($24.5 billion) of U.S. goods, while the EU has another one ready of about €72 billion, as well as some export controls.
Trump wants Mexico to do more to fight Fentanyl flow
In his letter to Mexican President Claudia Sheinbaum, Trump said the country has been “helping me secure the border,” but added that it wasn’t enough.
Trump added that if Mexico “is successful in challenging the cartels and stopping the flow of Fentanyl,” the U.S. would consider adjusting the levies.
“These tariffs may be modified, upward or downward, depending on our relationship with your country,” he added.
The letter is silent on whether the U.S. will preserve a carve-out for goods traded under the USMCA trade deal, which have been exempt from the current 25 percent rate. The administration has previously said it will keep the exemption for Canada.
Mexican Economy Minister Marcelo Ebrard called the new levies “unjust” in a post on X, where he said the two countries had just established a new working group on July 11 to address security, migration and economic issues.
“The first major task of the permanent binational group will be to conduct work so that before that date we have an alternative that will protect businesses and jobs on both sides of the border,” Ebrard wrote. “Mexico is already in negotiations.”
Mexico is the third country to get a letter that wasn’t actually facing a tariff hike on the now-extended July 9 deadline, following Canada and Brazil.
Other countries Trump has singled out for tariffs hikes in recent day include Japan, South Korea, South Africa, Indonesia, Thailand and Cambodia, as well as Algeria, Libya, Iraq and Sri Lanka.