What are the implications of Trump’s planned new 25% tariffs on EU cars?

Added: 2026-05-09

[00:00:00]Now, Alli Rennison is a former UK trade department official. She's now at consultancy SEC Newgate. Alli, thanks so much for joining us. Before we go into the China-Africa deal, I have to ask you about the breaking news around Donald Trump. We are just hearing in the last half an hour that he's decided to slap 25% on EU vehicles. What does this mean and what do you think's going on here?

[00:00:25]Well, I think as with many of President Trump's social media posts, we have to wait to see what is actually followed up with in terms of proposals coming from the US government from the US trade representatives office about exactly what that means. Now, I think there's a couple of different things going on here. Trump does have a long-standing gripe about the trade imbalance particularly in cars. Previously, you know, the EU's tariff average tariff for cars and all that sort of auto vehicles going into the European market is about 10%. The US is about two.

[00:00:53]And I think President Trump has talked about the fact that he'd like to see more sort of brand name American trucks being driven on German streets in addition to the luxury vehicles from Germany that get driven on American sort of highways.

[00:01:04]So, there is a long-standing gripe, but I think that as was alluded to before, there's also some frustration on a twofold front from the Trump administration with the EU. One is obviously that in terms of the consultation with foreign policy, they're being quite slow to sort of support his sort of offensive strike particularly countries like Spain taking a very hard line. But I think also that, you know, there have been some question marks about what the US and the EU agreed to as a sort of provision provisional trade outline framework a couple of months ago. It's been very slow getting through the sort of the EU sort of channels. So, I think that this is meant to sort of put pressure on a few different fronts. Yeah, and as you say, while we've seen the euro car stocks already reacting dropping quite sharply, we've got to see how this actually pans out. Um, Alli, let's talk more about the zero tariff deal for all but one African country um from China.

[00:01:54]Um how much is going to really benefit?

[00:01:57]Which countries, which products do you see real benefit for?

[00:02:02]I think, you know, it depends on what the sort of tariff treatment of some of these products was to begin with because obviously those that were facing sort of steep tariffs already. If you see them looking at sort of for example, tea coming from South Africa, fresh produce, fruits and vegetables coming from other parts of the continent going into China. Those had fairly high agricultural tariffs and particularly the ones that weren't included in in sort of what we call provisions around the least developed countries that already have fairly generous provisions unilaterally from China. And also those countries who were already part of the China-Africa agreement, there's about 20 of them. They're not going to see a huge change, but those that weren't party to those sort of liberalized tariff provisions definitely will see some change in the sort of processed and and raw sort of agricultural commodities market. I think it's a bigger question about sort of outside of that, what are the huge changes? I think we're looking at critical minerals is interesting area that China is definitely interested in sort of increasing the the flow, the two-way flow on critical minerals and making sure that it has access to um Africa's market. So, it's a real sort of statement of intent in a few areas and it contrasts sharply obviously with the direction of travel from the US. And of course, it's not just um tea and apples as Michael's piece explained, also South Africa for example produces a lot of cars for export. Do you see this as an opportunity to attract investors and actually get real growth going, not just the export of raw materials and commodities?

[00:03:29]Exactly, and I think that that's what some of these trade provisions Keep in mind it is predominantly a unilateral measure that that China has extended to African countries, but I think what what we're waiting to see is sort of the opportunity around does this really help consolidate trade and investment ties more widely. For example, bringing in perhaps some of the know-how to sort of help build with some of the infrastructure and sort of industries of the future in in in Africa including in for example in the automotive market. I think that what what both sides are hoping to see is this consolidation of ties that gives it sort of investors more confidence to say that this is a relationship that is only going from strength to strength.

[00:04:06]All right, thank you so much. That's Alli Rennison, former UK trade department official, now a consultant at SEC Newgate.