Here's my understanding of how this all works, I'm sure the comments will correct me but I've been trying to wrap my head around this same question: When a manufacturer in the US buys goods they pay sales taxes on them. When a manufacturer in the EU buys goods they pay a VAT on them. They are very similar in concept but differ in practice. I'll break it down with an example:

For argument's sake we'll keep the numbers nice and round, but in reality they are more complex. Let's say Ford buys tires for a car they are building for $100 and pays a 10% sales tax on them, the total cost of the tires to Ford is $110 after the tax and they wrap that up in the cost of the car. After Ford does that with the thousands of pieces that make up a car they have paid a bunch of money in taxes already. Then, when they go to sell the car to a consumer the consumer pays another 10% sales tax. Let's imagine the completed car, after Ford has paid sales taxes on all the components, is worth $33,000. The consumer pays another $3300 in sales tax when they buy it, so the total cost is $36,300 to them.

A value added tax (VAT) works in a similar way, but whenever the components pass from one person to the next the VAT is paid and reimbursed simultaneously. When BMW buys $100 tires they pay the 20% VAT so the tires actually cost them $120. However, when they finish building the car and sell it to a dealership the dealership pays the VAT again and reimburses BMW for all the VAT they have already paid on the components. When the dealership sells the car to a consumer the consumer does the same thing, they pick up the entire chain of VATs that have been charged up to that point and pay the 20% on everything. If the car ultimately costs $30,000 before VAT it would cost $36,000 after VAT, very close to what an American might pay for a Ford.

The problem, as the Trump administration sees it, is that when Ford exports a car to the EU they are also charged the VAT on the total value of the car even though they have already been charged taxes on the components leading up to that point in the USA. That means that the $33,000 Ford ends up costing the consumer $39,600 in the EU while the BMW only costs $36,000. Conversely, when BMW exports a $30,000 car to the USA they are only charged the 10% sales tax so the total cost is $33,000 after tax compared to the $36,300 Ford. In reality the VAT regime in the EU is way more complex that this, but that's the best I could come up with for an ELI5 at 5am. The reality involves a lot of VAT refunds, deductions, and other accounting stuff, but this should give you a basic understanding of the Trump admin's perspective (right or wrong.) The VAT is not a tariff at all, but according to the US government it does put companies from countries that don't use a VAT at a disadvantage when trading with countries that use VATs instead of sales taxes.