Trump threatens fresh tariffs, EU talks fail

Tariffs are back at the center of the U.S.-Europe relationship — and this time the fight is less about theory than about cars, deadlines, and whether either side believes the other anymore. Overnight talks in Brussels failed to lock in a long-delayed trade deal with Washington. That happened days after Donald Trump said he would raise tariffs on EU cars and trucks to 25% next week. The result is a familiar trade standoff, but with less patience and less legal room than before. (bloomberg.com) ### What actually broke this week? The immediate break came after Trump said on May 1 that the U.S. would increase tariffs on cars and trucks from the European Union to 25%, arguing that the bloc was not complying with a trade agreement struck last July in Scotland. EU negotiators then met late on May 6 to try to settle internal disagreements over how to implement that deal, but they left without a final decision. (cnbc.com) ### Why are cars the pressure point? Because autos are where Europe is most exposed. Germany, in particular, would take a direct hit if the 25% vehicle tariff goes into force. That is why governments that want a deal quickly have focused on getting the wider package through — remove some EU duties on U.S. industrial goods, open more access for American farm and seafood exports, and hope that calms the auto fight. (auto.hindustantimes.com) ### So why didn’t the EU just sign? Because a lot of European lawmakers no longer trust the bargain. Members of the European Parliament want stronger safeguards before approving tariff cuts. Their ideas include pausing the deal if Washington fails t(auto.hindustantimes.com)so the bloc is stuck arguing with itself as Trump turns up the pressure from outside. (auto.hindustantimes.com) ### What power is Trump using here? The White House said the change would be made under Section 232 — the same national-security authority used for earlier vehicle and auto-parts tariffs. That matters because Trump’s broader “reciprocal” tariff stra(auto.hindustantimes.com)cares deeply about. (cnbc.com) ### Did the U.S. and EU try to defuse it? Yes — but not successfully. EU Trade Commissioner Maroš Šefčovič met U.S. Trade Representative Jamieson Greer in Paris on May 5, and the tariff threat stayed on the table afterward. That is part of why the Brussels talks felt so tense. Europe was being asked to ratify a deal while the U.S. was openly threatening to punish one of its biggest export industries. (politico.eu) ### Where does the “bazooka” idea come in? That is the political warning from Paris. Emmanuel Macron has pushed the EU’s Anti-Coercion Instrument — basically Europe’s trade “bazooka” — as a response if U.S. tariff threats become reality. The tool has never been used, which is the point. It exists to show that Brussels can retalia(politico.eu)e as leverage. (politico.eu) ### Why does this matter beyond Europe? Because it adds to a broader tariff pileup that is already weighing on business planning and inventories. Even the more sympathetic case for tariffs — that they are bargaining chips — gets weaker when negotiations keep stalling and threats keep escalating. The prac(politico.eu)and ship. Fortune’s May 6 piece framed that damage bluntly, highlighting Mark Zandi’s view that the tariff campaign has already done “significant damage” to the U.S. economy. (fortune.com) ### Bottom line? This is no longer just a spat over one trade deal. It is a test of whether the U.S. and EU can still make a bargain that survives the next threat. Right now, the answer looks shaky. (bloomberg.com)