Proposed EU Trade Deal May Cut Vehicle Import Tariffs
The agreement could eliminate a 5 per cent tariff on European-made cars, potentially lowering costs for some car buyers.
Updated on Oct. 27, 2026 in Buying/Selling
Live Poll
Should the government lower import tariffs to reduce vehicle prices for consumers?
The Australian Automotive Dealer Association is pushing for Parliament to approve a new trade agreement with the European Union. This deal would eliminate a five per cent import tariff on qualifying vehicles from the EU, potentially lowering purchase costs for some car buyers.
Why it matters
If passed, the agreement could make European-sourced vehicles more affordable by removing the five per cent tariff, helping to increase competition in the local market. It also sets a new $120,000 threshold for the Luxury Car Tax on zero-emissions vehicles.
For a vehicle with a customs value of $50,000, removing the five per cent tariff would represent a $2,500 saving. Additionally, a new Luxury Car Tax threshold of $120,000 for zero-emissions vehicles would apply, a shift impacting approximately 1 per cent of vehicle sales.
The players
Australian Automotive Dealer Association
An industry advocacy group that represents the interests of dealership networks in negotiations with vehicle manufacturers and government regulators.
Joint Standing Committee on Treaties
The parliamentary body responsible for examining international agreements and reviewing necessary legislative changes.
The details
The proposed tariff removal applies specifically to passenger vehicles manufactured within the European Union, provided they meet origin requirements. While the agreement was concluded in March 2026, it must still undergo formal legal translation and receive legislative approval from the Australian Parliament. The Luxury Car Tax changes for zero-emissions vehicles will operate independently of a vehicle's country of origin, applying a consistent threshold to all eligible green cars.
Timeline
March 2026: Trade agreement negotiations concluded.
Late 2026 or early 2027: Signature of the agreement is expected.
2027 or 2028: Parliamentary and legal processes are expected to finish.
The Home Front
The proposed tariff elimination follows the existing pattern of preferential trade arrangements Australia currently maintains with nations like Japan and Thailand. This deal represents a significant policy update aimed at normalizing the cost structure for European-made passenger vehicles.
If you are considering a new European-made vehicle, monitor upcoming parliamentary sessions for news on the agreement's ratification status. While potential savings exist, keep in mind that the Luxury Car Tax threshold for zero-emissions vehicles is independent of the import tariff changes.
The takeaway
Tariff changes can significantly impact the final price of imported vehicles once they take effect. Prospective buyers should track the progress of the Australia-European Union Free Trade Agreement through 2027 to see if their next car purchase qualifies for potential duty savings.
Further reading
To understand how import regulations influence vehicle pricing, visit our guide on Buying/Selling.
Source note: This article includes information reported by GoAutoNews Premium.
Live Poll
Should the government lower import tariffs to reduce vehicle prices for consumers?
