How the USA and the EU fight over car tariffs. Or how to radicalize a discussion through fake news, omissions, and manipulations

A major US-Europe trade war is about to begin—at least, that’s how some tabloid press in Romania portray it, reducing the conflict to a Tom and Jerry-style cartoon where both sides bash each other with frying pans for public amusement. This is the surest way to derail the debate into childish arguments and ideological polarization, following the modern trend of reducing complex policy issues to cultural and identity-driven bickering—essentially, a symbolic street fight.

Both sides share the blame for encouraging such distortions, often for internal political reasons, but recently, the Trump administration has been particularly dedicated to inflaming tensions. Nowhere is this more evident than in the dispute over automobile tariffs.

In Washington, it has become an unquestioned truth that any trade deficit is bad (a debatable premise in itself), and the one with Europe is especially concerning, supposedly the result of cunning schemes crafted by the unelected bureaucrats of Brussels. At least, that’s what the White House tells American voters. Accordingly, flexing its muscles, the Trump administration has declared that it will no longer tolerate such „unfair” European tariffs on American cars.

At first glance, this might seem like a fair argument. The EU imposes a 10% tariff on cars imported from the US, while the US only charges a 2.5% tariff on European cars. A blatant injustice, Trump argues, that must be corrected by increasing tariffs on European imports to ensure „reciprocity.”

But, like any champion of industrial patriotism—an ideology gaining traction in Romania as well—Trump conveniently omits a few significant details. Or rather, major details the size of a house.

The reality behind the numbers

For decades, both the US and the EU have built intricate and labyrinthine systems of tariffs, exemptions, and quality regulations designed to protect their domestic car manufacturers. If commercial hypocrisy were an Olympic sport, Washington and Brussels would be neck and neck for the gold medal. Right now, it’s unclear who stands atop the podium.

General tariffs are just one cog in a vast protectionist mechanism. American outrage over European tariffs might seem reasonable—until you consider the so-called „chicken tax.” The US imposes a special 25% tariff on all imported light trucks (pickup trucks), a segment that includes massive vehicles like the Ford F-150 or RAM Pickup, which are also seen on European roads.

The catch? This category represents nearly a quarter of the US non-commercial vehicle market and is the most lucrative segment, generating around 35-40% of industry profits. In other words, the crown jewels are well protected, making it extremely difficult for even industry giants like Toyota or Volkswagen to compete in this segment.

And why is it called the „chicken tax”? It dates back to the 1960s when it was introduced as retaliation for European restrictions on American poultry imports. This asymmetric policy has persisted for 60 years, surviving every attempt to change it due to strong industry lobbying.

Even setting aside these asymmetries, the picture remains blurry. European-made cars imported into the US appear to face more favorable conditions partly because the EU applies a Value-Added Tax (VAT), while the US does not.

This is an argument that American officials frequently use to derail negotiations. Unlike in the US, where sales tax varies between 4% and 9% depending on the state, EU countries impose VAT ranging from 19% to 25%.

Since VAT is not refunded to exporters, European manufacturers must incorporate it into their pricing structure, even for American consumers. Conversely, American-made cars sold in the EU are subject to full VAT, depending on the member state where they are sold.

From here, an absurd debate emerges about how this impacts pricing on both sides, with each side claiming they are the ones being disadvantaged.

But this discussion is pointless: European VAT applies equally to all locally sold goods, regardless of whether they are produced in Europe or the US, at the same rate—so there is no discrimination in base taxation. Still, American negotiators insist that this represents a hidden form of protectionism, based on a complex argument that European manufacturers absorb part of the VAT cost by reducing their profit margins, thus lowering the final price for private buyers.

Depending on the year, manufacturer, and market conditions, this claim may or may not hold in practice. But to build an entire discrimination argument on such a nuanced and indirect effect—while theatrically expressing outrage—is a bit ridiculous.

Of course, no technical negotiation teams are that illogical; these arguments are thrown in purely to create stalemates or for public relations purposes.

Regulatory barriers and electric vehicles complicate matters further

Regulations also serve as trade barriers on both sides of the Atlantic. American car manufacturers face stricter emissions regulations in Europe, as well as safety standards that consider pedestrian protection, not just driver safety. Adapting US-made models to meet these requirements is often too expensive to be worthwhile.

Conversely, European manufacturers also face high costs to comply with US regulations, which focus on fuel economy and prioritize occupant safety. Only premium brands like Mercedes and BMW can afford to create two different versions of the same model for different markets, while smaller manufacturers stay within their home regions.

The rise of electric vehicles (EVs) further complicates the dispute. In 2022, the Biden administration introduced the Inflation Reduction Act (IRA), which provides a $7,500 tax credit for EV purchases but includes strict domestic production requirements. This effectively excludes most global manufacturers, including those from the EU.

In response, the EU imposed a 10% tariff on US-made EVs „to protect against cheap imports.”

Now, each side is accusing the other of discrimination, and the truth is difficult to determine because the vastly different regulatory environments make direct comparisons tricky. Meanwhile, most of the debate revolves around protecting manufacturers rather than benefiting consumers—otherwise, why would cheap cars be seen as a problem?

The real threat: China

While the US and EU argue over tariffs and unfair practices, a bigger threat looms: China. Brands like BYD and Nio are aggressively entering Western markets with incredibly low-priced EVs, supported by opaque government subsidies and vastly different labor policies.

Although Chinese automakers face their own struggles—including overproduction and brutal price competition, which have driven many into bankruptcy—the ones that survive are flooding global markets. China is steadily gaining market share, particularly in Europe.

As a result, both the US and the EU are considering additional trade barriers for Chinese-made cars, including tariffs (which, unless politically exempted, would also affect the Dacia Spring, manufactured in China).

The real question is whether the US and Europe will unite against this common threat or continue bickering over minor trade disputes.

Conclusion: A political show rather than real solutions

Despite all the heated rhetoric—Trump’s claims of „you take advantage of us” versus European complaints about American unfairness—the truth is that most resistance to change comes from within, not across the Atlantic.

Ultimately, these trade wars are less about a US vs. EU rivalry and more about internal battles between powerful industry groups with conflicting interests.

And since no election has ever been won by calmly analyzing complex issues, expect more dramatization, victimhood narratives, and trade protectionism—because that’s the spirit of the times.