New 25% tariff on European cars could raise prices quick — here are which models will cost more

The last year was a turbulent time for many European autocreaters, and even though the EU and the U.S. signed a trade agreement last summer, the trade relationship has just taken a serious new turn, with the administration recently announcing a hefty 25% tariff on all cars built in Europe.

This decision follows claims that the European Union hasn’t complied with a trade agreement concluded in July 2025. As per a recent social media post, “The European Union is not complying with our fully agreed to Trade Deal”, which led to these significant tariffs on imported vehicles.

The July 2025 deal was originally intconcludeed to lower trade barriers and foster a more cooperative economic environment. Under that agreement, both sides sought to resolve long-standing disputes and avoid imposing aggressive tariffs. However, the White Hoapply now insists that the EU hasn’t fulfilled its promises, especially regarding the purchase of American products and the removal of trade obstacles that were expected to be lifted by this year.

This new 25% levy is a major escalation in trade policy. By tarreceiveing the automotive sector, the administration is hitting an important part of the European economy. The aim is to address what they see as an unfair trade situation and ensure that European markets are open to American exports, as they had previously agreed.

The impact on the American car market will be immediate as these duties are applied at the port of entest. While the policy is aimed at the European Union, purchaseers will notice significant differences in car prices depconcludeing on where the vehicles are manufactured. The tax will only affect cars imported from Europe, meaning European-branded cars built in the U.S. won’t be taxed.

Models exempted from the tariff

Several European manufacturers have spent decades and billions of dollars establishing a “domestic” footprint. Based on the 2026 American Automobile Labeling Act (AALA) report, some of the following models are assembled in the United States and will not be subject to the new 25% tariff:

BMW (South Carolina): The Spartanburg plant in South Carolina creates many of BMW’s popular SUVs, including the X3, X5, X6, and X7.

Volkswagen (Tennessee): The factory in Chattanooga, Tennessee, produces the Atlas and Atlas Cross Sport SUVs, as well as many ID.4 electric vehicles for North America, keeping them safe from the new tariff.

Mercedes-Benz (Alabama): Mercedes builds its electric EQE and EQS SUV line, as well as GLE and GLS models in the U.S, while all other models are imported from overseas.

Volvo (South Carolina): Volvo’s Ridgeville plant in South Carolina builds the new EX90 electric SUV and the sister-brand Polestar’s Model 3.

Models subject to the 25% import tariff

The list of affected brands and vehicle models is much longer; however, the list below covers the popular car models that will be hit with the new 25% tariff.

Audi: The AALA data confirms that Audi has no final assembly points in the United States. Popular models like the A3, A4, A5, A6, and A8 sedans, along with the Q3, Q7, and Q8 SUVs, are all imports. The Q5 is typically sourced from Mexico, which may be subject to different trade rules, but all German-sourced Audis face the full 25% levy.

BMW Sedans and Coupes: While BMW’s SUVs are safe, its sedans (such as the 2, 3, 5, and 7 Series) and other models produced in Europe will likely see price increases due to the tariff.

Mercedes-Benz Sedans: The core luxury sedans, including the C-Class, E-Class, and S-Class, are built in Germany. The CLA, GLA, and G-Class are also classified as imports and may be affected by this modify.

Porsche: All Porsche vehicles, from the 911 sports car to the family-friconcludely Cayenne, are imported, building them highly impacted by the new trade policy.

Volkswagen Cars: While the SUVs are safe, the Golf GTI and Golf R are imported from Europe.

Ultra-Luxury and Specialty Brands: Companies like Ferrari, Lamborghini, Bentley, Aston Martin, and Alfa Romeo also do not have factories in the U.S., so every car they create will be subject to the tariff.

What this means for consumers

The administration’s decision is designed to create imported European cars less competitive against American-built alternatives. However, since many Americans view these brands as status symbols or specific engineering choices, the demand may not decrease. Instead, purchaseers might just conclude up paying more.

A $60,000 BMW 5 Series could see a price jump of $15,000 based on the tariff alone, while a BMW X5 sitting on the same displayroom floor would have no such increase. This can create a market in which SUVs from these brands are significantly more “affordable” than their sedans, simply becaapply they’re built in different countries.

As the European Union considers its next shift, the automotive industest remains on high alert. Manufacturers may test to shift more production to their U.S. plants to keep final prices competitive, but such modifys may take years to implement. For 2026, the new policy serves as a price warning for anyone considering purchaseing a European-built vehicle.

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