The European Union said on Saturday (2 May 2026) that if America takes steps contrary to the common trade agreement, it will keep all options open to protect its interests. This reaction comes after US President Donald Trump warned of increasing 25 percent tariff on cars and trucks imported from the European Union.

“We are fully committed to a stable and mutually beneficial trans-Atlantic relationship, but if the US does not live up to the joint statement, we will keep all options open to protect our interests,” a European Commission spokesperson told Chinese news agency Xinhua.

The spokesperson clarified that the EU is implementing its commitments under the agreement signed last year in accordance with the normal legislative process and during this time the US administration is being kept constantly informed. Besides, Brussels is also seeking clarity from Washington regarding its commitments under the agreement. As per the EU-US trade agreement signed last year, the EU agreed to suspend tariffs on US industrial products and impose tariff-rate quotas for agri-food products. In return, America had promised to impose 15 percent import duty on most European products.

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Tariffs on cars and trucks coming from the EU

Donald Trump said on Friday that he has increased the tariff on cars and trucks coming from the European Union to 25 percent. He alleged that the European Union is not following the existing trade agreement. Before leaving Marine One, Trump said, ‘We have increased tariffs on cars coming from the European Union because they were not following our trade agreement. This will bring billions of dollars to America and force companies to rapidly shift their production to America.

Trump also said that the purpose of this step is to motivate global automakers to increase investment in America. He claimed that at present auto plants worth more than $100 billion are under construction in America, which is a record. This includes investments from Japan, South Korea, Canada and Mexico.

Tension between America and European Union

This decision of tariff increase is being seen as a new increase in trade tensions between the US and the EU, especially in the auto sector, which has long been a center of dispute between the two sides. Experts believe that if this dispute escalates, it may also affect global supply chains and economic stability.

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In America, Donald Trump administration has started a new investigation against 16 major trading partner countries including India, China and Bangladesh. This investigation is being conducted under America’s Trade Act Section 301 (Trade Act 1974). Under this law, America can increase tariff i.e. import tax on any country. This step has been taken when last month the US Supreme Court had canceled the tariffs imposed by the Trump administration, calling them illegal. After this, America is again trying to put pressure through a new investigation.

US Trade Representative Jamieson Greer said that if irregularities are found in the investigation, new tariffs could be imposed on many countries. The countries that may be affected include China, European Union, India, Japan, South Korea and Mexico. The purpose of this investigation is to look at those countries which have more production capacity or which continuously sell goods to America with large trade surpluses. America says that in such circumstances the domestic industry may suffer losses.

Which other countries were included?

Other countries included in this investigation include Taiwan, Vietnam, Thailand, Malaysia, Cambodia, Singapore, Indonesia, Bangladesh, Switzerland and Norway. Interestingly, America’s second largest trading partner Canada is not included in this list. The US has also said that it is going to launch a separate investigation, which will look at the possibility of banning the import of products that are made with forced labour. This investigation can cover more than 60 countries.

What action did America take against China?

Even before this, America had taken action on solar panels and other products coming from Xinjiang region of China. This step was taken under the Uyghur Forced Labor Protection Act, which was recognized during the regime of former US President Joe Biden. America alleges that people of the Uyghur Muslim community are forced to work in the Xinjiang region of China. However, China has been denying these allegations. The Trump administration has set a fast deadline for this investigation. Suggestions will be sought from the public till April 15 and a public hearing will be held around May 5. After this, there is a plan to complete the investigation by July. This step is considered to be part of the larger goal of the Trump administration, in which America wants to reduce trade deficit and strengthen domestic manufacturing.

What is section 301?

Section 301 is an important part of the US trade law Trade Act of 1974. It is used when America feels that another country is adopting wrong or unfair methods in trade. Under this law, America can start an investigation against that country and impose tariffs or other trade restrictions if necessary. According to this law, the Office of the United States Trade Representative (USTR), the trade department of the US government, investigates the trade policies of a country.

It is often seen that whenever a trade deal is finalized, the head of state of another country either comes to India and talks or PM Modi goes to that country and participates in the discussion. In such a situation, the question arises that if PM Modi does not even set foot in any country, can any trade deal be finalized? Let us know what is its process?

How is the deal done without the presence of PM?

Suppose if a trade deal is made between India and any country, then it is not a sudden decision, but is the result of long-running technical and diplomatic discussions. In such cases, it is not necessary for the Prime Minister or the President to be personally present every time. The real work is done by authorized representatives and officials of governments, while top leaders provide political approval and direction.

Who talks on behalf of India in that country?

With whichever country a trade deal is signed, the Indian embassy and commercial wing present there handles such negotiations. The officers posted in this wing represent the business interests of India. These people remain in direct contact with the administration of that country, its trade representatives and related agencies. Issues like tariffs, import-export rules and market access are discussed at these levels.

Who signs the deal?

This type of trade deal is not completed with the signature of any one person. Usually such a deal is in the form of a framework or agreement, which is accepted by the authorized officials of both the countries. From the Indian side, the Ministry of Commerce, Ministry of External Affairs and senior trade representatives of that country finalize the documents.

What is the role of the Prime Minister?

Whatever the issue, the role of the Prime Minister of the country is strategic and political. During any trade deal, it is kept in mind that there is no compromise with the interests of the country, but it remains ready to cooperate with the other country.

When is a deal considered final?

It is important to understand that the agreement of any trade deal is very broad. Many conditions, such as reducing non-tariff barriers or future purchase figures, may be implemented in a phased manner. This means that in future also the officials of both the countries will sit and decide its detailed rules. All these things depend on the final legal provisions of the deal.

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