EU Drops Industrial Tariffs on U.S. Goods Under Trump's Car Tariff Threat
European Parliament strips tariffs on American industrial goods after Trump threatens 25 percent levy on European cars, cementing a major victory for America First trade policy.
The European Parliament voted 440 to 151 on June 16 to eliminate all tariffs on U.S. industrial goods, yielding to President Trump's threat of 25 percent tariffs on European cars. The decisive vote forces Brussels to implement its side of the 2025 Turnberry trade agreement by July 4 or face steep penalties.
American manufacturers and exporters now stand to gain from the opening of European markets. The Parliament's action implements the EU's commitments under the Turnberry agreement, originally struck July 27, 2025 at Trump's golf resort in Scotland between the president and European Commission President Ursula von der Leyen.
The deal strips the EU's average 1.35 percent tariff on U.S. industrial goods while capping American tariffs on most EU exports at 15 percent. The EU also commits to purchasing $750 billion in U.S. energy through 2028 and making $600 billion in U.S. investment by the same deadline. U.S. agricultural products gain preferential access, and lobster imports enter tariff-free through 2030.
EU lawmakers delayed ratification for months before collapsing under mounting American pressure. They paused the process in January 2026 after Trump threatened to annex Greenland, a Danish territory. A second pause followed in February when a U.S. Supreme Court ruling questioned the legal basis for reciprocal tariffs. Only after Trump's May threat of 25 percent car tariffs did the trade committee vote 31 to 6 in favor on June 2, clearing the path for the full Parliament's decision.
The EU secured defensive safeguards that speak more to European anxiety than negotiating strength. A suspension clause lets Brussels halt concessions if, by Dec. 31, 2026, the U.S. continues applying tariffs above the 15 percent ceiling on steel and aluminum derivatives. The provision also covers scenarios where Washington undermines the deal's objectives or discriminates against EU economic operators. A sunset clause expires the entire agreement on Dec. 31, 2029, with the Commission required to conduct a comprehensive assessment by June 30, 2029. Separate monitoring provisions mandate quarterly reporting on trade developments.
"We need a safety net in the relation with the United States, because at the moment it's totally unsecure and not predictable how the United States are acting," said Bernd Lange, chair of the European Parliament's International Trade Committee, at a May 20 press conference.
While the EU backed down on machinery tariffs, France refused to scrap its digital services tax. Trump threatened 100 percent tariffs on French wine and champagne on June 15 unless Paris eliminated its 3 percent tax on American tech companies. French President Emmanuel Macron stood firm, telling TF1: "Tariffs do no one any good, especially tariffs between G7 countries. No, because that is not how it works."
"It's not for the United States to decide what European or French law should be," Macron added. The digital tax generated roughly $700 million in 2025. France's wine exports to the U.S. account for about 20 percent of global sales worth over $2 billion annually.
Canada shelved its digital tax in 2025 under U.S. pressure, and Italy is reportedly weighing repeal. France's defiance against the machinery tariff surrender highlights the tension between practical compliance and costly resistance.
The Turnberry deal fundamentally rebalances transatlantic commerce. Before Trump, the U.S. ran a €198 billion ($232.5 billion) goods trade deficit with the EU. American tariffs on EU cars fell from 27.5 percent to 15 percent under the agreement, while the EU removes its protective barriers on U.S. industrial products.
Jack Allen-Reynolds of Capital Economics calculates the 15 percent tariff effectively raises U.S. tariffs on EU goods from 1.2 percent last year to 17 percent and would reduce the EU's GDP by 0.2 percent.
The EU Council is expected to approve the legislation on June 26, with the agreement taking effect upon publication in the Official Journal. U.S. Ambassador to the EU Andrew Puzder welcomed the Parliament vote as implementing EU tariff commitments.
Von der Leyen wrote on social media after the vote: "A deal is a deal — and the EU is delivering its part."
"The president has been unequivocally clear on digital services taxes and other forms of extortion against American tech firms," a senior White House official told FOX Business on June 15. "The administration is committed to using the many legal authorities at our disposal to defend American workers and businesses."
Trump told the New York Post in his June 15 interview: "I asked him not to charge American companies, and if they do, I have no choice but to charge a 100% tariff on all champagnes and all wines coming out of France."
The EU now faces the test of honoring its tariff commitments. France's digital tax defiance may yet face the same fate as Canada's.