Trump Slaps 25% Auto Tariff on EU, Threatens Alliance as Troop Withdrawal Looms

Key facts

• US Trade Representative Jamieson Greer confirmed the tariff hike to 25% on EU auto imports, up from 15% under an August agreement.
• The US Supreme Court ruled earlier this year that Trump cannot use IEEPA for global tariffs, limiting his authority.
• Trump imposed the 25% auto tariff under Section 232, citing national security; the EU deal had lowered it to 15%.
• Germany faces an estimated €15 billion ($24 billion) in lost output from the tariff, hitting BMW, Mercedes, and Volkswagen.
• The US announced withdrawal of 5,000 troops from Germany; Trump said he will cut 'way down' beyond that.
• Trump named Italy and Spain as potential targets for troop reductions, citing Germany's chancellor criticizing US Iran policy.
• Polish PM Donald Tusk warned the trans-Atlantic alliance faces 'disintegration' from internal pressures.
• EU leaders met in Yerevan with UK PM Keir Starmer and Canadian PM Mark Carney to show unity.

Tariff Hike Reverses July Deal

The United States will impose 25 percent tariffs on European Union auto imports, US Trade Representative Jamieson Greer told CNBC on Monday, reversing an agreement reached in August that had set levies at 15 percent. The move targets a sector that had been temporarily shielded by the earlier compromise, which Trump had shaken hands on with European Commission President Ursula von der Leyen last July. Greer said the White House is 'moving forward with this action,' citing the EU's alleged failure to comply with the deal. The tariff increase applies to a range of European exports including cars and trucks, and is expected to hit German automakers hardest—BMW, Mercedes, and Volkswagen maintain large US operations. The Czech Republic, France, Slovakia, and Sweden also face significant disruptions to their car and truck industries.

Trump's Authority Under Legal Cloud

Earlier this year, the US Supreme Court ruled that President Donald Trump could not impose global tariffs through the International Emergency Economic Powers Act (IEEPA), limiting his sweeping tariff powers. However, the auto tariffs were imposed under Section 232 of the Trade Expansion Act, which allows tariffs on imports deemed a national security risk. Trump had used that authority in 2018 to levy 25 percent tariffs on global automotive imports. Rachel Ziemba, adjunct senior fellow at the Center for a New American Security, noted that while Trump 'does have authority to do this,' the US leverage is 'somewhat less after the IEEPA tariff rulings.' She added that Europe had needed EU-level implementation of the August agreement, which delayed some aspects—though Trump's claim of non-compliance is rejected by EU officials.

Troop Withdrawal Deepens Security Fears

The tariff escalation coincides with a planned US troop withdrawal from Germany that has alarmed European leaders. The Pentagon will remove 5,000 soldiers and halt the deployment of long-range Tomahawk missiles, seen as fundamental to deterring Russia. Trump told reporters in Florida on Saturday that he would go further: 'We're going to cut way down, and we're cutting a lot further than 5,000.' He named Italy and Spain as potential targets for further reductions. The withdrawal follows Chancellor Friedrich Merz's comment that the US was being 'humiliated' in negotiations with Iran. Trump has complained in particular about Germany, accusing European countries of violating the trade agreement after they declined to send militaries to help the US Navy open the Strait of Hormuz.

European Leaders Rally in Yerevan

European Union leaders gathered in the Armenian capital of Yerevan on Sunday for a summit aimed at presenting a show of force among like-minded allies. British Prime Minister Keir Starmer and Canadian Prime Minister Mark Carney joined the talks, alongside European Commission President Ursula von der Leyen, French President Emmanuel Macron, Ukrainian President Volodymyr Zelensky, NATO Secretary-General Mark Rutte, and many EU leaders. Polish Prime Minister Donald Tusk warned on social media that 'the greatest threat to the trans-Atlantic community are not its external enemies, but the ongoing disintegration of our alliance.' He called for reversing 'this disastrous trend' and said the summit should signal that Europe's friendship with America is a 'common responsibility' with no alternative. 'We need each other more than ever before. Our allies can always count on Poland,' he said.

Economic Fallout and Open Questions

The sudden tariff increase from 15 to 25 percent is tipped to cost Germany about €15 billion ($24 billion) in lost output, according to estimates. The broader impact will ripple through supply chains across Europe, particularly in countries with large automotive sectors. The deal Trump shook hands on with von der Leyen in July had been thrown into doubt in January when he threatened higher tariffs as part of his demand for control of Greenland. Trump's tariff threats are widely seen as a negotiating tactic, but the legal constraints from the Supreme Court's IEEPA ruling may weaken his hand. The US has not specified what concrete steps the EU must take to restore the lower tariff rate, leaving the bloc in a position of uncertainty. European officials have rejected Trump's assertion of non-compliance, setting the stage for a protracted trade dispute that could further strain the alliance.

Trans-Atlantic Ties at a Crossroads

The combination of punitive tariffs and troop withdrawals represents the most serious rupture in US-European relations in decades. European leaders fear a 'disintegration' of the American alliance, as Trump signals a willingness to scale back both economic and security commitments. The tariff on auto imports, in particular, strikes at the heart of Germany's industrial base and threatens jobs across the continent. As the Yerevan summit concluded, the message from European capitals was one of unity but also urgency. Tusk's warning that the alliance faces greater danger from within than from external enemies captures the mood. The coming weeks will test whether diplomacy can reverse the escalation, or whether the trans-Atlantic partnership is entering a new era of fragmentation.

The bottom line

• Trump's 25% auto tariff on the EU reverses a July deal and targets Germany's car industry, with estimated losses of €15 billion.
• The US Supreme Court's IEEPA ruling limits Trump's tariff authority, but Section 232 provides a separate legal basis for the auto tariffs.
• Trump announced withdrawal of 5,000 US troops from Germany, with plans for deeper cuts, citing Germany's criticism of US Iran policy.
• European leaders, including UK PM Starmer and Canadian PM Carney, met in Yerevan to signal unity amid fears of alliance disintegration.
• Polish PM Tusk warned that internal pressures, not external enemies, pose the greatest threat to the trans-Atlantic community.
• The tariff and troop withdrawal create a dual crisis in trade and security, with no clear path to de-escalation.