Listen: Trump threatens with new tariffs on cars, will the EU retaliate? 

Production: By Europod, in co-production with Sphera Network.

EUobserver is proud to have an editorial partnership with Europod to co-publish the podcast series “Briefed” hosted by Léa Marchal. The podcast is available on all major platforms.

Find the full transcript below:

A few days ago, Donald Trump did it again. He threatened Europeans with new tariffs on cars.

This time, will Europeans show some teeth?

You might think of Germany as the one and only car producer and exporter. You’d be right — it’s the number one exporter. But other EU countries also have large car plants: Slovakia comes second, followed by Italy and Sweden. They host major facilities from Volkswagen, Stellantis, and BMW.

These plants rely heavily on exports to third countries. Their top destination: the US.

But since Donald Trump returned to power in the US, he has been making their lives difficult.

On Friday (1 May), he announced an increase in tariffs on European cars, raising them to 25 percent instead of the previously agreed 15 percent.

The official reason: the US president is dissatisfied that EU legislative procedures to lower some tariffs on their side have not been completed.

But this announcement also coincides with tensions between Trump and German chancellor Friedrich Merz.

According to Bernd Lange, chair of the International Trade Committee in the European Parliament, Trump is targeting German car manufacturers in particular, in a political move against Germany.

Last week, Friedrich Merz had harsh words for Trump, which the latter did not appreciate. As a result, he announced he would withdraw part of the US troops from Germany.

More broadly, Europeans are starting to have enough of Donald Trump’s behaviour, both on trade and foreign policy.

In recent weeks, EU leaders have toughened their tone on Trump’s decisions regarding the war in Iran. They also refused to get involved in the conflict, which they say is not in line with international law. We discussed this in a previous episode of Briefed.

So after this new blow from the American president, could the EU respond in kind?

First, let’s look at how the European Commission reacted to Trump’s latest announcement:

“We remain fully committed to a predictable, mutually beneficial transatlantic relationship. But we have also been very clear: should the US take measures inconsistent with the Joint Statement, we will keep our options open to protect European interests,” said EU commission spokesperson Thomas Régnier.

The EU does have some tools it could use. It could, for instance, impose counter-tariffs on the US. It has already established a list of products it could target. It also has at its disposal the so-called anti-coercion instrument, which allows for targeted sanctions against a third country.

However, while these measures have been considered in the past, they have never been implemented.

So far, what has worked to avoid prohibitive tariffs is diplomacy and patience.

This is how the EU managed to eventually reach a deal with the US.

Because if Europeans were to impose counter-tariffs, the US would likely escalate and introduce even higher tariffs. This could lead to a full-blown trade war.

And economic operators — especially car manufacturers — are all pushing for de-escalation. Too much is at stake for them.

Thousands of jobs in Germany, Slovakia, Italy, Sweden, and France depend on how heavily the US taxes European cars.

If tariffs remain high, car exports to the US could be halted, or production could be relocated across the Atlantic.

And this is already happening. German car makers Volkswagen, Mercedes or the Swedish Volvo, are all increasing their production in the US, to benefit from better conditions.

In any case, this means job losses in Europe.

The EU, therefore, has a strong interest in maintaining the lowest tariffs possible. And even if Trump’s decisions are frustrating across Europe, the need to remain on good terms with him for geopolitical reasons still stands.