Home > Business > Industry

U.S. cuts tariffs on European autos, parts to 15% as Korea's negotiations stall

Published: 25 Sep. 2025, 17:56

U.S. President Donald Trump and European Commission President Ursula von der Leyen shake hands after reaching a trade deal at the Trump Turnberry golf course in Turnberry, Scotland, on July 27. [AP/YONHAP]

The United States has cut tariffs on European automobiles and auto parts to 15 percent from 27.5 percent, following similar reductions for Japan. Korean automakers, still facing a 25 percent levy, are now at a disadvantage as negotiations with Washington stall.

The Department of Commerce and the Office of the U.S. Trade Representative (USTR) announced the change in a notice published in advance Wednesday, one day before its official release in the Federal Register.

“On Aug. 21, the United States and the European Union announced agreement on a Framework on an Agreement on Reciprocal, Fair, and Balanced Trade,” the notice read. “On Sept. 5, President Donald Trump issued Executive Order 14346, modifying the scope of reciprocal tariffs and establishing procedures for implementing trade and security agreements.”

Accordingly, tariffs on autos and related parts are set at 15 percent, retroactive to Aug. 1, the notice announced.

The tariff reduction is conditional on the EU eliminating duties on U.S. manufactured goods and opening its market to certain U.S. agricultural and seafood products. The EU completed these prerequisites by introducing draft legislation on Aug. 28.

The notice also listed hundreds of other products eligible for exemptions, including natural resources not available in the United States, aircraft and aircraft parts and certain pharmaceutical ingredients. These exemptions apply retroactively from Sept. 1.

Trump had imposed a baseline 10 percent tariff on all trade partners starting April 5, and from Aug. 7 added differentiated “reciprocal tariffs” by country. For the EU, this meant a 20 percent duty — the baseline 10 percent plus 10 points — until the United States and EU reached their July 27 deal to reduce both reciprocal tariffs and auto tariffs to 15 percent.

Cars ready for export are piled up at a port in Pyeongtaek, Gyeonggi, on Sept. 16. [YONHAP]

Japan, which signed a memorandum of understanding (MOU) with Washington earlier, has been applying the 15 percent tariff on autos and parts since Sept. 16.

Korea agreed with Trump on July 30 to lower both reciprocal tariffs and auto tariffs from 25 percent to 15 percent. But follow-up negotiations over how to formalize a $350 billion investment pledge remain unresolved, leaving implementation uncertain.

With both Japan and the EU now benefiting from reduced tariffs, Korea — which enjoyed duty-free auto exports to the United States under the Korea-U.S. FTA until Trump took office — faces a continued 25 percent tariff burden, eroding competitiveness.

“The reality is that Korean carmakers now face higher tariffs than Japanese and European competitors, leading to mounting sales losses,” a domestic auto industry official said. “All we can do is hope the Korea-U.S. follow-up talks conclude quickly and smoothly.”

U.S. Energy Secretary Chris Wright holds a press conference on the sidelines of the International Atomic Energy Agency (IAEA) General Conference in Vienna, Austria on Sept. 15. [REUTERS/YONHAP]

Separately, U.S. Energy Secretary Chris Wright told reporters at the New York Foreign Press Center that Washington is in talks with Japanese, Korean and other Asian companies on participation in the Alaska liquefied natural gas (LNG) pipeline project.

“I think the prospects for Alaskan LNG look quite strong, so I think that project should be under construction in the next 12 months-ish,” said Wright. “It will take a few years to build, but what's great is it's very short ship traffic from there to our awesome allies, like Japan in East Asia. And at the end of the day, the gas that'll come out of there will be no more expensive than gas coming from all the other LNG export terminals.”

Recently, Posco International signed a preliminary agreement with U.S. energy company Glenfarne and the Alaska Gasline Development Corporation (AGDC) to consider joining the project as an investor. Posco E&C, another group affiliate, is also reviewing participation, drawing on its domestic and overseas LNG terminal construction experience.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY KIM HYOUNG-GU [[email protected]]