(The Center Square) – President Donald Trump threatened to raise tariffs on European Union cars and trucks to 25%, accusing the EU of violating a trade agreement the bloc says lost its legal foundation after the U.S. Supreme Court struck down the authority used to negotiate it.
Trump announced the move on Truth Social, saying the EU “is not complying with our fully agreed to Trade Deal” and pledging no tariff for automakers that produce vehicles in American plants.
The announcement landed on American consumers already stretched by high borrowing costs and eroding confidence. The average auto loan rate hit 9.70% in March, and the typical monthly car payment reached $752, according to Cox Automotive. University of Michigan consumer sentiment fell to 49.8 in April, a new low, as gas prices topped $4 per gallon for the entire month.
Research suggests consumers would bear most of a new tariff’s cost. Studies indicate businesses pass along up to 95% of tariff costs to buyers, and a Duke University study found Americans paid more than the tariff amount on European goods during a 2019–21 trade dispute.
The Center Square Voters’ Voice Poll conducted in March found that 42% of voters already believe American consumers are primarily paying the cost of Trump’s tariffs, compared to just 12% who think foreign countries bear the burden.
The EU’s car exports to the United States fell 21.4% in value in 2025 to €30.9 billion, a decline the European Automobile Manufacturers’ Association attributed directly to existing U.S. tariffs.
