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The US will not ease steep tariffs on European cars until Brussels introduces legislation to lower its duties on American goods, casting doubt over how quickly one of the bloc’s most prized industries could secure a reprieve.
US officials agreed to reduce the 27.5 per cent tariff imposed on most autos to 15 per cent as part of an agreement struck in Scotland last month, but the Trump administration has so far not moved to slash the duties.
A US official said on Wednesday evening that Washington would hold off on lowering the car tariffs to make sure the EU was “undertaking its part”.
Germany, the EU’s biggest economy, had pushed hard for the hasty deal agreed in principle in Scotland to staunch the billions of euros in losses suffered by its auto industry, which relies heavily on exports to the US.
Donald Trump imposed a 25 per cent tariff on European car exports in March, which came on top of an existing rate of 2.5 per cent.
The US president has sought to reshape global trade in his second term with sweeping levies on dozens of trading partners.
The EU secured a much lower tariff than the 30 per cent that was at one point threatened by Trump, but the duty still marked a threefold increase on its average rate before the US president re-entered office.
The continued wrangling over the EU deal shows that despite the public fanfare over trade agreements struck with the Trump administration, many details still remain mired in negotiations.
In exchange for a reduction to 15 per cent on cars, the EU had agreed to eliminate tariffs on all US industrial products including cars and give preferential market access to many seafood and agricultural goods, including pork, dairy products and tree nuts.
This requires approval by the member states and possibly the European parliament, which could take some time, so EU officials pushed for the US to move as soon as legislation is introduced.
A joint statement released by Washington and Brussels on Thursday outlined the full details of the deal for the first time after weeks of negotiation.
The statement confirmed that the deal would cap US tariffs on pharmaceutical goods, lumber and chips at 15 per cent. However, the sectors all remain subject to ongoing US national security probes that could ultimately result in higher duties.
The statement also said that the US would apply a zero tariff rate to aircraft and aircraft parts, generic pharmaceuticals and their ingredients, and “unavailable natural resources” such as cork.
A push by France and Italy for a similar carve-out for wines and spirits failed.
The two sides struck a deal last month to lower Trump’s reciprocal tariffs on the bloc’s goods to 15 per cent or the general “most favoured nation” level if higher.
While the rate on European cars would go down to 15 per cent, importers of pick-up trucks, which make up a large slice of the market, would continue to pay 25 per cent.
Brussels had pledged not to change its internal regulations on car standards as part of a deal, but the statement showed it had agreed to “mutual recognition” of US standards.
Trump has long complained that the bloc’s standards had been used to keep out American vehicles.
The EU also confirmed it “intends to procure” $750bn of American liquefied natural gas, oil, and nuclear energy by 2028.
It also said it intends to purchase at least $40bn of AI chips and more weapons, confirming pledges made by European Commission president Ursula von der Leyen when she met Trump in Scotland.
But the final level of duties on the European steel and aluminium industry, which was hoping for immediate relief from 50 per cent tariffs, was still unclear.
The statement confirmed that the two sides would consider a lower tariff quota for the metals as part of an effort to “secure supply chains between each other” but added that further talks were required.
Additionally, the two sides agreed to work together on investment reviews and export controls, an attempt to curtail the growing economic influence of China.
A senior US official on Wednesday evening said Washington’s deal with the EU was “one of the most significant” of the recent trade agreements it had struck.
