MW Trump hits E.U. with fresh tariff threat. Here's how cars get caught in the crossfire.

By Victor Reklaitis

One of the biggest European Union imports to the U.S. is automobiles

President Donald Trump has sent out around two dozen tariff letters in the past week, and one of the latest ones went to the European Union, threatening a 30% tariff on imports to the U.S. beginning Aug. 1.

E.U. officials said they'll hold off on imposing retaliatory tariffs on U.S. goods that had been due to take effect Monday, as they hope to reach a trade deal with the Trump administration by the end of this month.

One of the biggest E.U. imports to the U.S. is automobiles, so how are they faring in this trade fight?

In his letter to the 27-nation trade bloc on Saturday, Trump said the bloc will face an import tax of "30% on EU products sent into the United States, separate from all Sectoral Tariffs." That appears to indicate that the new 30% duty is a separate matter from existing sector-based levies, and it won't stack on top of them.

There has been a new 25% tax on imported automobiles in effect since early April, as well as a new 25% duty on many imported automotive parts in effect since early May. So that's what European-based manufacturers of cars and car parts seem set to continue facing.

When Trump announced plans for these industry-specific levies in February, he highlighted how the E.U. imposes a 10% tariff on American-made light vehicles, while the U.S. at that time was only imposing a 2.5% tariff.

The new U.S. duty of 25% for imported light vehicles matches America's 25% tariff on imported trucks that has been in place for 60 years and applies to most sport-utility vehicles. Trump has spoken favorably about the levy for trucks and SUVs, often called the "chicken tax."

Given the long-running import tax on SUVs, it makes sense that German automobile makers have long had U.S. facilities for producing those vehicles. The Volkswagen ID.4, an electric SUV made in Tennessee, this year even ranked in the top 10 in one index that evaluates vehicles on the extent to which they're "made in the USA."

The American market is crucial for the E.U.'s car manufacturers. The U.S. accounts for 18% of VW's revenue, 24% of Mercedes-Benz Group's revenue and 19% of BMW's revenue, according to FactSet data.

But it's mostly a different story for the U.S.'s Big Three. Europe is important for one of the three, Stellantis, which was created in a merger of Chrysler and Italy's Fiat. Stellantis, whose headquarters are in the Netherlands, gets 10% of its revenue from France, 7% from Italy and 5% from Germany.

But for Ford and General Motors, the figures are much smaller, with Germany ranking as their biggest E.U. customer but only providing around 1% of revenue for each U.S. company. GM has retreated in Europe in recent years, having sold off its Opel and Vauxhall brands in 2017, while Ford's Europe unit two years ago announced the elimination of 3,800 jobs in an effort to become a leaner, more competitive business.

The E.U. hasn't made an effort to target Ford and GM with its proposed retaliatory tariffs. Instead, iconic American motorcycle maker Harley-Davidson is among the possible targets. That's even as Harley-Davidson, like Ford and GM, doesn't get much revenue from the E.U., according to FactSet data.

While the S&P 500 stock index is up around 6% so far this year, shares in Ford (F) are up 19%, GM (GM) is down 1% and Stellantis $(STLA)$ has dropped 24%. Harley-Davidson (HOG) has lost 19%.

BMW's stock (XE:BMW) is up 6%, VW (XE:VOW3) has gained 4%, and Mercedes-Benz (XE:MBG) is down 3%.

-Victor Reklaitis

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July 14, 2025 12:04 ET (16:04 GMT)

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