When G7 trade ministers met in Paris this week to discuss critical minerals and the fallout from the war in Iran, attention quickly shifted to a transatlantic storm: US President Donald Trump’s threat to impose a 25% tariff on European car imports. The announcement overshadowed the summit and forced urgent talks between EU and US trade officials.
Trump has justified the threat by pointing to what he calls incomplete implementation of the Turnberry Agreement, a tariff compromise forged at his Turnberry golf resort in Scotland. Under that deal the US agreed to cap tariffs on EU goods at 15%, while the EU would eliminate tariffs on US industrial products. The European side rejects the claim it has failed to live up to the agreement, but the European Parliament has not yet ratified the pact.
In Paris, EU Trade and Economic Security Commissioner Maros Sefcovic met US Trade Representative Jamieson Greer and said both sides “clearly concluded” they should respect Turnberry. Sefcovic stressed that the EU needs to reduce tariffs on US exports as agreed and the US should return to the promised 15% ceiling. Germany’s economic affairs minister, Katherina Reiche, also described progress in implementing the compromise and said resolving auto-export issues was a priority for Germany.
Late in the week Trump partially backed away from immediate action, telling European Commission President Ursula von der Leyen he would wait until July 4 — the US 250th anniversary — before deciding whether to raise tariffs to higher levels. The pause buys time for negotiations but does not remove the threat.
Legal and economic complications add to the uncertainty. A recent US court ruling struck down some of Trump’s earlier global tariffs, opening the door for more legal pushback against unilateral US measures. And independent analyses warn of real damage if higher levies go ahead: researchers at the Kiel Institute for the World Economy found German automakers would suffer roughly €15 billion in short-term losses and up to €30 billion over the longer term. The US is the second-largest market for German cars after the EU, and such losses would hit an already fragile German economy.
Observers have parsed possible motives beyond the Turnberry dispute. Some saw the tariff threat as retaliation after German Chancellor Friedrich Merz publicly criticized US handling of the Iran situation; the US announced plans to withdraw as many as 5,000 troops from Germany shortly after. Others point to friction with Italy’s prime minister, Giorgia Meloni, who has also been publicly critical of Trump. Penny Naas of the German Marshall Fund cautions that the US may simply be trying to pressure Europe to speed implementation of Turnberry.
Delays in the European Parliament’s ratification process have contributed to the problem. Lawmakers twice stalled action on the deal — once after Trump’s ill-fated comments about possibly invading Greenland, and later in response to the US Supreme Court’s rulings on some tariff measures. Those pauses have increased European sensitivity to US demands and led parliamentarians to call for safeguards in case Washington fails to honor its commitments.
The episode underscores a broader reality: unpredictability has returned to transatlantic trade relations. Even when political leaders strike compromises, implementation can be slow and vulnerable to political retaliation. For now the EU is scrambling to accelerate ratification and press for protections, while businesses — especially automakers — face the prospect of renewed tariff-driven disruptions.