On the Dash:
- EU lawmakers and governments remain deadlocked on how to implement the deal reached last year.
- President Trump has threatened to raise tariffs on European cars and trucks to 25%.
- U.S. dealers carrying European brands face uncertainty on future inventory costs.
European Union lawmakers and governments resumed talks Wednesday to finalize a trade deal governing tariffs on U.S. imports, but a resolution could be months away.
The talks come as the Union faces added pressure from President Donald Trump to get the deal done. On Friday, Trump posted on Truth Social that he would raise tariffs on EU cars and trucks to 25% if the EU does not comply with the terms of the Turnberry agreement reached last year.
What’s delaying the deal
Parliament wants protections built into the legislation, including a clause that would suspend the deal if the U.S. imposes additional tariffs and an expiration date of March 31, 2028.
Impacts to U.S. dealers
U.S. dealers carrying European brands are closely watching the process. Without a deal in place, dealers remain unsure what their future inventory will cost. The longer the EU takes to come to an agreement, the more time Trump has to follow through with higher import taxes.
The risks for dealers depend largely on the brand and where certain models are built. Volkswagen assembles the Atlas and ID.4 in Chattanooga, Tennessee, so those vehicles won’t be subject to the higher import taxes. But Porsche and Audi, both owned by Volkswagen, will, since they are built overseas. Ferrari and Lamborghini, both made in Italy, are in the same position. BMW and Mercedes also ship a significant share of their U.S. inventory from European plants, although some models are made in the U.S.
The import tax could also affect service operations in the U.S., as European-made parts would be subject to the higher tariff.
What to watch for next
The leader of the European People’s Party, the largest bloc in Parliament, is pushing for a final vote by the end of this month, but many diplomats say that’s an ambitious timeline. A second round of talks will likely be needed in June.
For dealers, a June resolution is an optimistic scenario. Until the EU governments and Parliament find common ground, inventory costs for European imports remain an open question, and Trump has shown no hesitation to take action when negotiations drag on.
