President Donald Trump fired a fresh shot across the Atlantic last Friday. He announced plans to raise tariffs on cars and trucks from the European Union to 25% from the current 15%. The reason, he said, was simple. The EU had failed to comply with a trade agreement struck last July at his Turnberry golf resort in Scotland.
That deal, known as the Turnberry Agreement, had lowered levies on European vehicles entering the U.S. market. In exchange, Brussels pledged to cut duties on American industrial goods, farm products and seafood. Nine months later, the EU side remains unfinished. Legislation to implement those cuts sits stalled between the European Parliament and the Council of member states. And now the clock is ticking louder than ever.
Shares of German automakers slid immediately after the announcement. BMW, Mercedes-Benz and Porsche felt the heat. Their heavy reliance on the American market leaves them exposed. Yet some executives treated the move as negotiation theater. BMW’s chief executive Oliver Zipse told investors the threat served as a bargaining chip to push the EU toward faster compliance. The company held its 2026 guidance steady, betting tariffs would ease later in the year. Reuters reported on the earnings call and Zipse’s comments.
But not everyone views it so calmly. U.S. Ambassador to the EU Andrew Puzder delivered a blunt warning on Bloomberg Television. “Unless we see some substantial progress, I think you probably should expect those relatively soon.” His words left little room for delay. U.S. Trade Representative Jamieson Greer had already conveyed the same message to EU and German officials over the weekend. The administration intends to move forward.
So the EU scrambles. Lawmakers and governments plan to resume talks Wednesday in a bid to finalize the text that would scrap duties on U.S. imports. Many member states push hard for speed. They see the tariff hike as an immediate threat to jobs and growth, especially in Germany. Chancellor Friedrich Merz put it plainly. “The Americans have it finalised, and the Europeans haven’t – and that’s why I hope we can reach an agreement as quickly as possible.” Reuters detailed the member states’ urgency and Merz’s statement.
Yet the European Parliament demands more. Its members insist on safeguards. They want the ability to suspend the deal if Washington fails to meet its obligations. Tariff cuts should be conditional. Some propose a hard end date of March 31, 2028, for EU concessions. Sunrise and sunset clauses. Mechanisms to protect against sudden U.S. policy shifts. Bernd Lange, chair of the parliament’s trade committee, argued Trump’s behavior made such protections even more necessary. “Trump’s behaviour was unacceptable and meant the various safeguards sought were even more necessary.”
Governments show little enthusiasm for these additions. One EU diplomat told reporters the two sides remain far apart. Further talks may stretch into next month. Manfred Weber, leader of the center-right European People’s Party, called for a final parliamentary vote this month. That timeline now looks ambitious. Political groups argue the latest threat only strengthens the case for ironclad protections. Divisions persist. Compromise won’t come easy.
The original agreement emerged from months of tension. Trump and European Commission President Ursula von der Leyen had averted a broader trade war last summer. The 15% tariff on European autos represented a compromise. But implementation lagged. Parliament paused the process twice. First after Trump threatened tariffs on allies who opposed his Greenland ambitions. Then after new U.S. import levies appeared. Each pause added friction. Each added doubt about European commitment.
Now the stakes rise. A 25% tariff would hit luxury brands hardest. It would raise costs for American buyers of BMWs, Audis and Mercedes models. European factories would face pressure to shift production stateside or absorb losses. German Economy Minister Katherina Reiche, representing a nation at the center of the storm, said she was engaged in intense talks with U.S. officials. She expressed hope they could “solve this challenge.”
EU Trade Commissioner Maros Sefcovic planned to join the Wednesday negotiations. European Commission President von der Leyen struck a firmer tone earlier. “A deal is a deal. And we have a deal.” The bloc, she added, stood prepared for every scenario. French officials signaled readiness to retaliate if U.S. measures targeted strategic industries. The rhetoric hardens even as diplomats seek compromise.
Analysts see larger lessons. Trump’s willingness to rewrite terms highlights the fragility of such accords. A Wall Street Journal analysis described the move as a wake-up call for U.S. trading partners. Deals offer limited protection when one side perceives noncompliance. The threat also casts a shadow over this week’s G7 trade ministers meeting in Paris. Discussions on critical minerals and supply chains now carry added tension.
Yet some voices urge caution. Ignacio García Bercero, a senior fellow at the Bruegel think tank, warned against haste. “The EU should take the time it needs to reach an agreement, not give in to pressure nor move to escalation.” Applying pressure, he added, could prove counterproductive. The parliament’s push for safeguards reflects deeper worries about future U.S. unpredictability. Those concerns won’t vanish overnight.
Automotive supply chains hang in the balance. European plants export hundreds of thousands of vehicles annually to the United States. Higher duties could accelerate decisions to invest in American facilities. Some companies already pursue that path. Others resist. The threat alone disrupts planning. It raises input costs. It clouds forecasts.
Wednesday’s talks represent only the latest chapter. Even if lawmakers bridge their differences this week, ratification and implementation will take time. Trump has shown he won’t wait patiently. His social media post made that clear. Billions in revenue and faster factory relocation stand as explicit goals.
The EU finds itself squeezed. Speed risks weak protections. Caution risks punishing tariffs. Member states lean toward swift action to shield their industries. Parliament prioritizes long-term leverage. Somewhere between those positions lies a possible text. But the gap remains wide. And the deadline feels artificial yet very real.
Markets watch closely. So do trade officials on both sides of the Atlantic. A resolution could calm nerves and preserve the Turnberry framework. Failure might trigger retaliation, higher costs for consumers and fractured relations at a moment when global tensions already run high. The coming days will test whether Brussels can align its internal factions before Washington acts. The auto sector, for one, cannot afford prolonged uncertainty.
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