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US Slashes EU Vehicle Tariffs to 15% Under New Trade Terms
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Key Takeaways
The U.S. reduced EU vehicle tariffs to 15%, down from 25%, effective retroactively to Aug. 1, 2025.
Porsche and Volkswagen lowered 2025 profit outlooks after delaying an EV launch amid softer demand.
Mercedes and Renault also cut sales and margin forecasts, citing weaker volumes and higher pressures.
The United States has cut import duties on vehicles from the European Union to 15%, retroactive to Aug. 1, 2025, which confirms the terms of the trade framework agreed upon earlier this summer. The Commerce Department and the Office of the U.S. Trade Representative released details online related to reduced tariffs on a variety of goods.
The revisions also grant exemptions for industries, such as aviation, generic pharmaceutical drugs, plus ingredients, as well as specific metals and ores, effective Sept. 1, 2025. While most rate changes apply to EU shipments beginning Sept. 1, the reduction for cars and parts was tied to the EU lowering tariffs on American exports. The EU implemented those cuts on Aug. 28, enabling the Trump administration to retroactively apply the new auto duty.
Previously, imported EU vehicles faced a 25% tariff in addition to existing duties. Per the U.S. notice, the product list could still be revised. The decision follows an executive order signed by President Donald Trump earlier this month, streamlining tariff adjustments with trade partners.
Per European Automobile Manufacturers’ Association data, EU new car registrations dropped 0.7% in the first seven months of 2025 versus the same period last year.
Last week, Volkswagen AG’s (VWAGY - Free Report) subsidiary, Porsche, postponed its EV launch due to softening demand, headwinds in China and higher U.S. tariffs. The delay has led both Porsche and Volkswagen to trim their 2025 profit outlooks. Porsche now expects a positive sales return of up to 2%, down from the previous estimate of 5-7%. It now targets a medium-term operating return on sales in the low double digits and aims for solid business growth of up to 15%, which is on the lower side of its earlier guidance of 15-17%. Per Reuters, Volkswagen has lowered its profit margin forecast to 2-3% compared with the previous guidance of 4-5%.
Mercedes-Benz Group AG (MBGYY - Free Report) also forecasts significantly lower unit sales for the full year 2025 due to weaker sales volumes, softer pricing and import duties. Mercedes-Benz Cars now expects adjusted return on sales in the 4-6% range. Mercedes-Benz Vans expects adjusted return on sales to be in a range of 8-10%.
Per Investing.com, Renault SA (RNLSY - Free Report) reported weaker-than-expected results in June due to lower sales volumes and mounting commercial pressures. Its light commercial vehicle division also underperformed, impacted by a steep decline in the European market. In light of these issues, Renault Group has adjusted its full-year 2025 targets. Renault is now aiming for an operating margin of approximately 6.5%, down from its earlier outlook of 7% or more. It has also reduced its free cash flow forecast to a range of €1 to €1.5 billion, down from the previous target of more than €2 billion.
While VWAGY and MBGYY carry a Zacks Rank #3 (Hold) each, RNLSY carries a Zacks Rank #5 (Strong Sell) at present.
Image: Bigstock
US Slashes EU Vehicle Tariffs to 15% Under New Trade Terms
Key Takeaways
The United States has cut import duties on vehicles from the European Union to 15%, retroactive to Aug. 1, 2025, which confirms the terms of the trade framework agreed upon earlier this summer. The Commerce Department and the Office of the U.S. Trade Representative released details online related to reduced tariffs on a variety of goods.
The revisions also grant exemptions for industries, such as aviation, generic pharmaceutical drugs, plus ingredients, as well as specific metals and ores, effective Sept. 1, 2025. While most rate changes apply to EU shipments beginning Sept. 1, the reduction for cars and parts was tied to the EU lowering tariffs on American exports. The EU implemented those cuts on Aug. 28, enabling the Trump administration to retroactively apply the new auto duty.
Previously, imported EU vehicles faced a 25% tariff in addition to existing duties. Per the U.S. notice, the product list could still be revised. The decision follows an executive order signed by President Donald Trump earlier this month, streamlining tariff adjustments with trade partners.
Per European Automobile Manufacturers’ Association data, EU new car registrations dropped 0.7% in the first seven months of 2025 versus the same period last year.
Last week, Volkswagen AG’s (VWAGY - Free Report) subsidiary, Porsche, postponed its EV launch due to softening demand, headwinds in China and higher U.S. tariffs. The delay has led both Porsche and Volkswagen to trim their 2025 profit outlooks. Porsche now expects a positive sales return of up to 2%, down from the previous estimate of 5-7%. It now targets a medium-term operating return on sales in the low double digits and aims for solid business growth of up to 15%, which is on the lower side of its earlier guidance of 15-17%. Per Reuters, Volkswagen has lowered its profit margin forecast to 2-3% compared with the previous guidance of 4-5%.
Mercedes-Benz Group AG (MBGYY - Free Report) also forecasts significantly lower unit sales for the full year 2025 due to weaker sales volumes, softer pricing and import duties. Mercedes-Benz Cars now expects adjusted return on sales in the 4-6% range. Mercedes-Benz Vans expects adjusted return on sales to be in a range of 8-10%.
Per Investing.com, Renault SA (RNLSY - Free Report) reported weaker-than-expected results in June due to lower sales volumes and mounting commercial pressures. Its light commercial vehicle division also underperformed, impacted by a steep decline in the European market. In light of these issues, Renault Group has adjusted its full-year 2025 targets. Renault is now aiming for an operating margin of approximately 6.5%, down from its earlier outlook of 7% or more. It has also reduced its free cash flow forecast to a range of €1 to €1.5 billion, down from the previous target of more than €2 billion.
While VWAGY and MBGYY carry a Zacks Rank #3 (Hold) each, RNLSY carries a Zacks Rank #5 (Strong Sell) at present.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.