US import customs on cars from EU should decrease retrospectively

The US tariffs on auto imports from Germany and other EU countries are to be reduced to 15 percent in retrospect. EU trade commissioner Maros Sefcovic announced in Brussels that the EU would meet the necessary requirements. “I think these are welcome news for the auto industry,” he said. Most recently, the duty rate for cars introduced from the EU to the USA was 27.5 percent.

Shortly before, the EU and the USA had published a joint explanation based on the trade agreements made in Scotland by EU Commission President Ursula von der Leyen and US President Donald Trump. It states that the United States will retrospectively reduce its auto tariffs at the beginning of the month as soon as the EU initiates the legislative process for import relief in favor of certain US products. For example, tariffs are to be fully abolished to US industrial goods and barriers for importing certain foods.

After the Trump’s meeting and from the Leyen on July 27, the carmakers had so far waited in vain for hoped -for tariff cuts, since their vehicles initially did not fell under the regulations for a new basic customs set of 15 percent. According to the explanation, this should now be changed. In the document, numerous other already known agreements between the EU and the USA are recorded.

The EU assures Trump to buy US energy worth $ 750 billion until the end of its term of office. According to previous information from Leyen, liquid gas (LNG), oil and nuclear fuel from the United States should fill the gaps that will arise after the planned complete waiver of Russian gas and oil. In addition, the EU Trump promises to invest another $ 600 billion in the United States in the coming years.

The joint explanation is not legally binding. The EU has to fear that Trump will increase tariffs again unilaterally if appointments are not implemented. The United States did not respond to the EU proposal to completely do without tariffs on industrial goods.

The EU accepted the deal because US tariffs in the amount of 30 percent and a real trade war had threatened without agreement from August 1st. Member States wanted to prevent this escalation because it would have threatened the trade and jobs even more at least in the short term. “I would like to say clearly that the alternative, a trade war with extremely high tariffs and a political escalation, does not help anyone,” said Sefcovic when the explanation was presented on Thursday. This conflict would have harmed companies on both sides of the Atlantic.

In addition, there was concern that Trump could build up new threats in the event of a tightened conflict – for example by once again questioning military assistance within NATO or supporting support for Ukraine again – both are extremely sensitive issues given the threats from Russia.

If the Europeans were not so dependent on the United States in the field of defense, they might not have accepted the deal. Economically, the EU, with around 450 million citizens in 27 countries, is a real market power that could hardly affect the United States in a trade conflict.

For the European auto industry, the situation improves a bit through the political explanation, but it remains difficult. In this way, duty-free for US imports in the EU means that it will have to expect stronger competition from US manufacturers in the future. In addition, the new 15 percent customs is still high. Before Trump’s taking office, the duty was 2.5 percent.