Trump threatens 25% reciprocal tariff on EU Cars, bloc vows to 'react firmly and immediately'

US President Donald Trump said Wednesday (February 26) that his administration plans to impose a 25 per cent “reciprocal” tariff on European cars and other goods, escalating trade tensions with the European Union.

Asked whether a decision had been made on tariff rates for EU imports, Trump responded, “We have made a decision, and we’ll be announcing it very soon, and it’ll be 25 per cent, generally speaking, and that’ll be on cars, and all of the things.”

Trump’s trade advisers argue that value-added taxes imposed by European nations function as a form of tariff, giving EU countries an unfair advantage over American exports.

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The president has set early April as a target for implementing reciprocal tariffs to match import duties and offset other trade restrictions imposed by foreign countries.

The EU, Trump said, represents a “different case” from Canada and has long taken advantage of the United States in trade.

“They don’t accept our cars. They don’t accept, essentially, our farm products,” he said, adding that the EU was created “in order to screw the United States.”

EU’s response

In response, a European Commission spokesperson said the EU “ will react firmly and immediately against unjustified barriers to free and fair trade,” including for tariffs that challenge legal and non-discriminatory policies.

They defended the bloc’s trade policies, calling the EU “the world’s largest free market” and a key partner for US businesses.

“The EU has facilitated trade, reduced costs for US exporters, and harmonised standards and regulations across 27 countries,” the spokesperson said. “As a result, US investments in Europe are highly profitable.”

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The spokesperson added that the EU is open to dialogue but warned that it would act to protect its economy.

“Europe stands for dialogue, openness, and reciprocity. We’re ready to partner if you play by the rules. But we will also protect our consumers and businesses at every turn. They expect no less from us.”

Meanwhile, European Parliament President Roberta Metsola was in Washington on Wednesday for meetings with U.S. lawmakers, though she did not have any scheduled talks with Trump administration officials.

With inputs from Reuters