Trump Just Tore Up the EU Auto Deal. The Supply Chain Running Through Germany Is Next.

Most automotive supply chain teams have spent the past year adjusting to the Turnberry Agreement's 15% tariff ceiling on EU vehicles. That baseline just got ripped up.

US President Donald Trump announced on May 1 that he will increase tariffs on cars and trucks from the European Union to 25%, accusing the bloc of not complying with the agreed trade deal. The move comes at a particularly tense moment for US-EU relations, with Germany already in Trump's crosshairs over its refusal to join the Iran war effort. 

The announcement reverses a key provision of the 2025 US-EU trade framework, which had capped vehicle tariffs at 15%, with implementation targeted for the week of May 8. The mechanism is straightforward: a tariff increase of this scale raises the landed cost of every EU-built vehicle or part before it reaches a buyer.

Who takes the hit and where it runs through

The European automakers most exposed to the tariff change would be Mercedes, BMW, and Volkswagen, which import a large percentage of the vehicles they sell in the US from their plants in Europe. The exposure is not uniform. BMW manufactures its X5, X6, X7, and XM at its Spartanburg, South Carolina plant, which gives it some insulation. Other models, such as the 3 Series and 4 Series, are primarily produced in Germany and carry the full tariff exposure. Mercedes faces a similar split, with Alabama-built SUVs insulated while European-built sedans including the S-Class remain fully exposed. 

The pain runs deeper than finished vehicles. One industry source told Al Jazeera that a client producing clutches for Stellantis and Volkswagen, shipping to Germany and the UK for production, has already seen sales slow because customers do not anticipate bringing those products into the US. That is the component supply chain contracting before the tariff has even formally landed. 

The political context that makes this harder to plan around

The status of the Turnberry Agreement had already been cast into doubt after the US Supreme Court ruled earlier this year that Trump lacked the legal authority to declare an economic emergency and charge tariffs on EU goods under those provisions. The Trump administration is in the middle of investigations on trade imbalances and national security risks to impose a new tariff regime, which could ultimately put the agreement with the EU in further risk of violation. 

Trump also suggested that automakers could avoid the tariff by shifting production to US facilities, a signal that the policy is partly designed as a manufacturing incentive and not just a trade lever. For businesses operating in the import chain rather than manufacturing, that option is not available. And for the tier-one and tier-two suppliers feeding European assembly plants from Poland, Czech Republic, Slovakia, and Hungary, the option is even further out of reach. 

The exposure for European and Asian companies

The EU had said it expected the bilateral deal would save European car manufacturers between €500 and €600 million a month. The value of EU-US trade in goods and services amounted to €1.7 trillion in 2024. What is now in play is not just the cost of exporting cars. It is the investment planning, production allocation, and sourcing decisions of the entire European automotive ecosystem, built around assumptions about US market access that no longer hold. 

The disruption does not arrive as a parts shortage or a freight delay. It arrives as the quiet collapse of a pricing model that an entire industry structured itself around.