Trump surcharge lifts car tariffs to 35%

European cars heading to America now face cumulative tariffs as high as 35%. Steel and aluminium face 60%. On June 2, the Trump administration proposed an extra 10% tariff on EU exports, added to levies already in force, accusing Europe of failing to combat forced labour in its supply chains (USTR, CNBC). The EU shipped €532 billion in goods to the US in 2024 (Bundesregierung). Much of that trade is now exposed to the new charge.

For Malta, this is less about car factories than about the leverage Washington can apply to the single market Malta trades through. A tariff fight aimed at Germany’s industrial base still lands on the EU’s negotiating position as a whole, including smaller states whose exports depend on rules they do not set alone.

The legal switch

The tariffs needed a new legal route. In February, the Supreme Court ruled 6-3 in Learning Resources v. Trump that the president cannot use IEEPA, the International Emergency Economic Powers Act, to impose tariffs (Supreme Court). IEEPA is an emergency powers law, not a trade tariff statute. All IEEPA tariffs were terminated within days.

The administration then moved to a different law. On March 12, the US Trade Representative opened Section 301 investigations against 60 countries, using a trade mechanism with explicit congressional backing. The charge is that these countries tolerate forced-labour goods in their supply chains. The EU faces 10%; countries without forced-labour legislation, including Japan and South Korea, face 12.5%.

The framing is politically difficult to resist, because no government wants to be seen defending exploitation. Bernd Lange, chair of the European Parliament's trade committee, called the findings "utterly absurd" (NBC News). He pointed to the EU’s own forced-labour import ban, adopted in 2024 (Council of the EU). His conclusion was blunt: "First the tariff measure is decided, then the suitable legal justification is found."

Washington still has an argument it can use. The EU's Forced Labour Regulation will not apply until December 2027. The US approach presumes any product from China's Xinjiang region is tainted unless the importer proves otherwise. Europe puts the burden of proof on regulators, not companies.

The European Commission called the tariffs "unjustified". Both sides say they want the same outcome, but the EU’s three-year enforcement delay gives Washington a useful pressure point at the negotiating table.

Who pays the stacked bill

The forced-labour levy is added on top of existing tariffs. That is where the damage builds.

The Turnberry trade deal, the EU-US framework from August 2025, set most tariffs at 15%. Add 10%, and the baseline for most EU exports reaches 25%. For steel and aluminium, where Section 232 national-security tariffs already stand at 50%, the total reaches 60%. For cars, already carrying 25% under existing auto levies, the surcharge pushes rates towards 35%.

That explains why Germany is so exposed. Bernstein Research calculates that a 10-point increase alone would cut German automakers' operating profits by €2.6 billion this year. Malta may not be an auto economy, but it sits inside the same customs union and the same political bargain. When the big exporters are hit, the EU’s room for manoeuvre narrows for everyone.

Pharmaceuticals, the EU's biggest US export category at 22.5% of total goods trade, are explicitly exempted, along with energy and aircraft parts. That protects pharma-heavy Ireland for now. Germany's auto and machinery sectors remain fully exposed.

The DIHK, Germany's chamber of commerce, reports that 59% of surveyed firms already face rising compliance costs from US tariffs, with 14% scaling back their US operations. Among companies staying in the US market, 68% pass the cost to American buyers through higher prices. European exporters lose margin; American consumers pay more. The split depends on bargaining power, but two-thirds of firms have already chosen their route.

The tariffs are not final. Public consultation runs until July 6. The pharma exemption is the largest variable: if it is removed, EU exposure rises by roughly a fifth. Section 301 rests on firmer congressional ground than IEEPA did, but blanket country-level tariffs on allies over enforcement timelines have not been tested in court. The next legal challenge will have to decide whether that is trade enforcement or tariff policy dressed in a new legal suit.