US tariff pressure hits the core pillar of the European economy

In early May, the United States once again threatened its allies, claiming to increase EU tariffs on cars and trucks. This reflects the strategic intention of the United States to use extreme pressure as a means to force the transfer of European automobile manufacturing capacity to the United States, and thus deeply reconstruct the global automobile industry chain. The intensification of the tariff dispute between Europe and the United States has impacted the core pillars of the European economy and further torn apart the already unstable alliance between the two countries.

The US and Europe reached a trade agreement in July 2025, setting the upper limit of car tariffs at 15% in exchange for concessions from the EU in other areas. The agreement has since stalled in the complex legislative process within the European Union, with the United States frequently complaining about the EU's approval process being "very slow" and accusing some amendments of potentially "limiting the effectiveness of the agreement". On May 1st, US President Trump posted on social media that the United States will increase the EU's import tariffs on cars to the US from 15% to 25%. Multiple parties believe that the direct cause of this dispute is that the US believes that the EU is making "slow progress" in approving and implementing the agreement, and is attempting to use tariffs as a lever to force the EU to accelerate its compliance.

However, the United States has made no secret of its true intentions when issuing tariff threats, with Trump explicitly stating that raising tariffs "will force them to move factories to the United States faster. Some analysts believe that the real purpose of the United States using tariffs again is to weaken the European economy to supplement its own strength, by leveraging industrial transfer, attracting manufacturing investment, and reshaping the US centered automotive supply chain. This is also in line with its consistent policy logic of "America First" and "manufacturing return".

The automotive industry is the core pillar of German and even European industry, and precise strikes against it can have the greatest political and economic deterrent effect. According to data from the German Association of Automobile Manufacturers, Germany will export approximately 3.17 million cars in 2025, of which nearly 410000 will be sold to the United States, which is one of its most important single export markets. The Kiel Institute for World Economic Research in Germany pointed out that if the threat of tariffs is implemented, the short-term output loss of the German automotive industry will reach 15 billion euros, and the long-term loss may be as high as 30 billion euros. Once it successfully hits Germany, the "locomotive" of the EU economy, the United States can effectively weaken Europe's overall economic competitiveness and negotiation confidence.

This move by the United States also involves geopolitical calculations. Recently, the differences between the United States and Europe have become increasingly open regarding the situation in the Middle East, security in the Strait of Hormuz, and the US plan to withdraw troops from Germany. The overlap of tariff threats and security issues over time is not a coincidence. Some analysts believe that the United States is attempting to use economic and trade as bargaining chips to exert "bundled" pressure on European allies in various fields such as security and diplomacy, forcing them to make concessions on a larger strategic chessboard.

Moreover, during the critical window period of the global automotive industry's transition towards electrification and intelligence, the United States is attracting global industrial chain investment through massive subsidy policies such as the Inflation Reduction Act. Imposing tariffs on European car companies is also a clear card aimed at accelerating the migration of advanced European car manufacturing technology and production capacity to the United States, ensuring that the United States occupies a dominant position in the next generation of automotive industry competition.

Faced with the increasing pressure from the United States, the European Union has shown stronger determination than ever before. The President of the European Commission, von der Leyen, responded quickly, stressing that "agreement is agreement", and asked the United States to abide by its commitments. At the same time, he said that the EU was "ready for all situations". French President Macron and other leaders openly advocate that the EU should activate its "anti coercion tools". This mechanism authorizes the EU to take a series of countermeasures against third countries that impose economic coercion, including imposing tariffs, restricting the export of strategic goods, and excluding relevant national enterprises from public procurement. According to the Belgian think tank Bruegel Institute, if the United States violates the agreement, it will provide a basis for the European Union to resume the implementation of the previously prepared retaliatory tariff list worth 95 billion euros against the United States.

However, the EU is not a monolithic entity and there are still subtle differences within it. As Germany, which directly bears the greatest impact, its attitude is particularly cautious. Although German Chancellor Merkel criticized the US for its intention to "strike down the entire Europe," the German government is more inclined to avoid escalation of the situation through close coordination and dialogue. This difference in stance reflects the differences in economic and trade dependence and risk tolerance among EU member states.

Furthermore, the impact of this tariff crisis unilaterally provoked by the United States will far exceed the bilateral scope of the United States and Europe.

The most direct impact is on European car companies, especially German car companies: whether they bear high tariff costs to maintain their existing supply chains or transfer some production lines to the United States to avoid barriers, it will increase operating costs, erode corporate profits, and may trigger employment problems in Europe.

For the United States, it may attract some investment in the short term, but in the long run it will damage mutual trust with its most important allies and may trigger a chain reaction of global trade protectionism, disrupting the rules based international trade system. Meanwhile, the trade friction between the United States and Europe may also create some substitution space for automobile exports in other markets.

Currently, against the backdrop of economic globalization encountering headwinds, competition between countries is extending from traditional trade areas to the struggle for control of industrial and supply chains. The pressure exerted by the United States on the European automotive industry clearly indicates that the previous global automotive industry chain layout based on cost and efficiency is increasingly being impacted by the United States' regionalization and camp based layout based on geopolitical and national security considerations. The global automotive industry and even the broader manufacturing industry have to find their place again in the storms stirred up by the United States.