The newly announced EU-US trade agreement pledges a sharp increase in American energy imports to Europe and reduces car tariffs, but critics highlight unrealistic targets and risks of job losses in EU automotive sectors amid ongoing regulatory uncertainties.

The new trade agreement just announced between the European Union and the United States—kind of a big deal—has stirred up a mixed bag of reactions among the major industries. You see, it highlights some pretty tough challenges and uncertainties that could shake up the transatlantic economic relationship quite a bit.

At the heart of this deal is the EU’s pledge to buy around $750 billion worth of U.S. energy goods—things like oil, liquefied natural gas (LNG), and nuclear fuel—over the next three years. Now, if you do the math, that’s about $250 billion in energy imports from the U.S. each year. The goal? To cut Europe’s heavy reliance on Russian energy. But here’s where the critics jump in; many industry insiders and analysts have called this target overly optimistic. The reality is, in 2024, the EU only imported about $75 billion in U.S. energy, so tripling those imports seems pretty ambitious—almost impossible in some ways—especially considering Europe’s own push for decarbonisation. Not to mention, the energy market isn’t exactly flexible, with key players driven by profit motives—so Brussels can’t exactly force the pace of imports. For the U.S. energy sector to hit these numbers, they'd have to redirect a big chunk of existing exports, which, given global market trends, raises questions about how feasible that really is.

Moving over to cars—that’s always a hot topic—there are some notable tariff tweaks embedded in this agreement. The U.S. will reduce its tariffs on cars and car parts imported from the EU to a flat 15%, down from previous levels that sometimes hit 25%. Meanwhile, the EU is planning to remove its 10% tariff on American-made cars. That’s similar to what’s been agreed with Japan earlier. But, and here’s the catch, unlike Japan where vehicles could be considered U.S. standard-certified, the EU and U.S. are only talking about working together gradually on aligning their regulatory rules—particularly in the emerging field of autonomous vehicles—over time, rather than committing to immediate harmonisation. So, while it seems like progress, the details on how or when this will happen are still pretty fuzzy.

This has prompted some serious concerns from industry stakeholders, especially in Germany. The German Automotive Industry Association, known as VDA, warns that even with the tariff cuts, the high duties still imposed on Mexico-produced vehicles and parts—somewhere around 25%—create a distortion. It might lead manufacturers to think about moving production to the U.S., a practice called “tariff hopping,” which could end up hollowing out jobs in Europe’s automotive sector. Ferdinand Dudenhöffer, who heads the Center for Automotive Research, estimates that up to 70,000 jobs in Europe, including in supplier networks, could be at risk. Interestingly enough, some analysts believe that the idea of setting a 15% tariff to promote more U.S. auto manufacturing might backfire by encouraging even more imports of foreign vehicles assembled elsewhere, which kind of muddles the industrial policy ambitions.

Then there’s the broader trade landscape, beyond just energy and cars. The agreement enforces a blanket 15% tariff on about 70% of European exports to the U.S., covering big areas like semiconductors, pharmaceuticals, and other industrial components. While this is a step down from potential threats of tariffs soaring up to 30%, it still pushes U.S. tariffs way above the previous average of roughly 1.2%. That kind of jump could push up costs for American consumers and squeeze European exporters, possibly slowing down economic growth on the continent. Some particular sectors—like aircraft parts and certain raw materials—are still exempt, which might ease some concerns there.

Politically, the deal isn’t winning hearts across the EU either. Leaders from France and the Netherlands, among others, have raised alarms that this agreement could undermine EU sovereignty, and some see it as the EU putting itself in a more submissive position—kind of bowing to U.S. interests. Apparently, the deal was rushed into place under significant pressure, with tight deadlines, and many of its practical details remain uncertain until formal ratification and implementations are sorted out.

For people working across the automotive aftermarket—the OEMs, manufacturers, suppliers, workshops, fleet managers—these changes are a big wake-up call. Tariffs, regulatory standards, energy procurement—all these factors mean they’ll need to be quick on their feet, strategising carefully to avoid higher costs, supply chain surprises, or shifts in where and how production happens. Keeping a close eye on ongoing policy developments will be crucial in adapting their operations as this complex transatlantic trade environment continues evolving, probably sooner rather than later.

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Source: Noah Wire Services