EU and US Formally Implement Trade Agreement, Defusing Tariff Threat to German Auto Industry

The EU Council and European Parliament reached agreement on May 20 on two regulations implementing the tariff elements of the EU-US Joint Statement trade pact. The deal eliminates remaining customs duties on US industrial goods and grants preferential tariff rate quotas for some US agricultural products entering the EU. For Germany, the agreement defused the most acute threat to its economy: the Trump administration's threatened 25% tariff on European cars, which would have directly hit Germany's flagship export sector (Volkswagen, BMW, Mercedes-Benz account for more than 40% of EU automotive exports to the US). Chancellor Merz stated the deal demonstrated the EU was 'delivering on its commitments' and delivering 'security and stability' for European businesses. The Bundesverband der Deutschen Industrie (BDI) industry federation welcomed the agreement, calling it 'essential for Germany's export-dependent economy.' Germany-US trade reached €220B in 2025.