Recent U.S. trade developments have created renewed uncertainty for the European automotive sector. A landmark U.S. Supreme Court decision has curtailed one avenue for imposing broad tariffs, while at the same time the administration is pursuing alternative measures, including a proposed global tariff of up to 15%. For OEMs and suppliers with exposure to the U.S. market, the key question is not whether tariff risk remains — but how it may evolve and what practical steps should be taken now.
The following Q&A highlights the most relevant legal implications and outlines pragmatic actions for automotive companies operating across the EU–U.S. corridor.
1. What did the U.S. Supreme Court actually decide on tariffs — and why does it matter for the automotive sector?
The Court significantly limited one presidential tariff tool — but not tariffs in general.
In February 2026, the U.S. Supreme Court held that the President cannot rely on the International Emergency Economic Powers Act (IEEPA) to impose broad tariffs, emphasizing that major trade measures require clear congressional authorization.
Why this matters for automotive companies
- The ruling creates legal uncertainty around sweeping “global” tariffs.
- It strengthens the position of importers challenging past duties.
- However, sector-specific auto tariffs based on other statutes (e.g., Section 232) remain legally viable, as a general rule.
2. What is the legal risk of the new proposed 15% global tariff?
Following the ruling, the administration announced a new global tariff of up to 15% under Section 122 of the Trade Act, which allows temporary tariffs for up to 150 days without Congress.
Key legal limitations
- Strict time limit (150 days)
- Historically rarely used
- Likely subject to further litigation
- Requires stronger justification for any extension
Risk assessment for automotive
- High short-term volatility
- Unclear situation regards existing agreements with the EU
- Continued political trade pressure
Having said this, it’s unclear how such tariffs would affect existing agreements between the EU and the US.
3. Do existing EU-US automotive tariff arrangements still hold?
This is unclear as they are politically exposed.
The Supreme Court decision did not invalidate sectoral tariffs imposed under other statutory authorities. As a result:
- Existing auto tariff frameworks generally remain in force
- The administration has signaled it will maintain or re-route tariff measures through alternative laws
However, the European Parliament has halted ratification of the planned trade agreement with the US in response to the new US tariffs. This means that a political solution to harmonize standards or mutual tariff exemptions has failed for the foreseeable future.
Companies should expect continued policy volatility.
4. What automotives should do now
First, monitor further developments regarding a potential “trade deal” between EU and US.
Second, evaluate litigation and refund strategies.
The ruling has already triggered calls for refunds of unlawfully collected duties, though recovery may take years of litigation. It’s unclear whether and to what extent this will be an option for automotive manufacturers and suppliers and highly depends on whether tariffs have already been paid and on what basis. Measures could include:
- US tariff mapping with regards to affected products
- Assess possible refund claims with US experts should the company be or been affected by tariffs imposed based on IEEPA
- Challenge unlawful tariffs in U.S. courts, and if applicable, consider filing protective refund claims
- Review importer-of-record structures
Third, evaluate tariff engineering and supply chain optimization.
Assess whether strategy changes can bring more stability and reliability against current uncertainties. For many automotive players, this is the most effective near-term lever. Measures may include:
- Origin and substantial transformation analysis
- Reclassification review
- Increased U.S. localization
- CKD („Completely Knocked Down“) / SKD („Semi Knocked Down”) structuring
- Use of regional trade frameworks
- Assess change-in-law clauses in contracts, check cost pass-through options and renegotiation triggers to find options to modify existing agreements to reflect current developments
Bottom line for the automotive industry
- The Supreme Court ruling is important but not a tariff reset.
- The U.S. administration retains multiple alternative tariff tools.
- Volatility, not liberalization, is the base case.
Companies that act early on tariff exposure, contracts, and supply chains will be best positioned.
