US President Donald Trump announced 25% tariffs on imported cars and light trucks starting next week on Wednesday, expanding the world trade war that he kicked off when he reclaimed the White House this year, and hopes automotive industry experts will promote price and stymie production.
“What we’re trying to do is 25% tariffs on all cars not made in the US,” Trump said at an event in the oval office.
Trump, who views tariffs as a revenue-raising tool to offset the promised tax cuts and revive long-term US industrial bases, said the collection will begin on April 3.
European Commission Chairman Ursula von der Leyen described the move as “bad for businesses and bad for consumers,” but Canadian Prime Minister Mark Carney called it a “direct attack” on Canadian workers.
“We defend our workers, protect our company, protect our country, and we protect it together,” Carney told reporters in Ottawa.
United auto workers, longtime critics of the Free Trade Agreement, praised them for saying they had destroyed American jobs.
“These tariffs are a major step in the right direction for autoworkers and blue-collar communities across the country, and are now in automakers from Big 3 to Volkswagen and others, to get good union jobs back to the US.”
Automaker’s stocks fell in trading outside of business hours, with US stock index futures sliding down, indicating stocks are heading towards a lower open on Thursday.
The legal basis for the lawsuit is a 2019 national security investigation under section 232 of the 1962 Trade Act, and is a car import conducted by Trump’s first administration. The investigation found that automobile imports undermine U.S. national security, but at the time Trump had not taken action to impose tariffs.
As a sign of acuteness that new taxation is being imposed, Trump’s directive includes temporary exemptions for auto parts, while government officials have categorized the complexity of turning the declaration into practice.
For example, auto parts complying with the US Mexican-Canada agreement on trade that Trump negotiated during his first term are exempt for now. The agreement allows most tax-free trade between the United States and its two largest trading partners.
“USMCA compliant automotive components will remain free of tariffs until the Secretary of Commerce establishes a process to apply tariffs to non-US content in consultation with the US Customs and Border Protection (CBP),” White House Principal Harrison Fields said of the X.
Additionally, all other auto parts will be exempt until May 3rd, when they are imported.
The US imported $474 billion worth of automotive products in 2024, including $2200 billion worth of passenger cars. Mexico, Japan, South Korea, Canada and Germany were all US allies and largest suppliers.
Prior to Trump’s announcement, stocks of US listed automakers have fallen into concern that tariffs will send shockwaves through the global automotive industry, already upset by Trump’s rapid fire tariff threat and the uncertainty caused by the occasional reversal.
The US stock market also fell on tariff concerns that have been causing investors for much of last month. The Benchmark S&P 500 Index fell 1.1% over the press conference, falling more than 4%, the worst monthly performance in nearly a year.
Since taking office on January 20th, Trump has announced tariffs in Canada and Mexico, claiming that what he is claiming is the role of allowing the opioid fentanyl to the United States. We will set import tax on goods from China for the same reason. He launched a large number of positions related to the import of steel and aluminum. He repeatedly promoted his plan to announce global mutual tariffs on April 2nd.
Regarding the April 2nd announcement, Trump said the measure may not be a collection he pledges to impose.
“We’re going to be very generous about it,” Trump said. “I think people will be very surprised. In many cases it’s less than the tariffs they’ve been charging for decades.”
According to the Auto Center, the U.S. automotive industry is heavily dependent on imported parts, so taxation on new vehicles was expected to drive consumers’ costs thousands of dollars higher, crashing into new vehicles’ sales, resulting in job losses.
“At a time when costs are the number one concern for American car buyers, US automakers are working to provide consumers with a variety of affordable vehicles,” said Jennifer Safavian, president and CEO of Autos Drive America, a trade group representing foreign carmakers, in a statement. “The tariffs imposed today will make it more expensive to produce and sell cars in the US, ultimately higher prices, fewer consumer options, and fewer manufacturing jobs in the US.”
