US and EU trade deal details: How auto industry will be affected

In a joint statement, the EU and US have said that automotive imports and automotive parts imports to the US will not be subject to the usual 27.5% tariff, and will instead be charged a 15% duty. The deal will need to be signed off by each member of the EU.

US tariff changes: Visual map of key trade rates

Recent trade deals have been changing tariff rates for various countries, seeing some drop from previously threatened higher tariffs, while others have increased. Each rate holds consequences for the automotive industry, potentially shifting supply chains and flows as OEMs, suppliers and logistics providers alike attempt to ascertain the most optimal, efficient and cost-effective transport routes and markets.

Anushka Dixit

However, the announcement doesn’t bring the clarity the automotive industry would’ve hoped for, as it still doesn’t give a definitive deadline for when the tariff reductions will take effect.

The statement said that the reduction on automotive tariffs to 15% would take place when the EU formally introduces reductions to tariffs on the US. This includes the EU's intention to drop tariffs on automotive imports from the US to the bloc, which could benefit the likes of BMW and Mercedes-Benz, although when this will be enforced by the EU is not clear either.

While the EU is aiming to backdate the lower rate to August 1, the additional uncertainty around when the lower duty is implemented will be a cause for concern for carmakers in Europe, particularly for German OEMs like BMW and VW Group, which export to the US.

Hildegard Müller, president of VDA, the German association for the automotive industry, said the framework is a positive sign, but that the EU must reduce tariffs on the US quickly.

“Given the many challenges facing the economy, it is imperative that the EU acts swiftly,” said Müller. “Companies urgently need clarity and planning security.”

He added: “It must not be forgotten that the US tariffs now agreed upon will also burden the German automotive industry. This makes it all the more important that Berlin and Brussels resolutely tackle their own homework with regard to locational attractiveness and competitiveness.”

China, Brazil take legal route to dispute steel tariffs

Other regions are not having the same success in trade negotiations with the US and are instead disputing the tariffs.

US extends 50% steel and aluminium tariffs, driving auto supply chain risk

The US administration has extended the scope of 50% import tariffs for steel and aluminium goods, adding more than 400 additional items to the levy.

Megan Kelly

Countries including China and Brazil have taken the legal route to dispute the 50% tariffs imposed on steel and aluminium imports to the US by president Donald Trump.

While China initiated a dispute with the World Trade Organisation (WTO) against the US in February, the two countries have come to a framework agreement. Now, China has initiated a complaint against Canada, challenging its tariffs on Chinese steel and aluminium imports.

Now Brazil is the latest to complain to the organisation about the US tariffs. The US has accepted a request for consultations over the dispute on the 50% tariffs imposed on Brazilian imports.