US President Donald Trump on Wednesday announced that the United States will impose a 25% tariff on imported autos, a move expected to further strain relations with key trading partners just days before additional levies are set to take effect.
“All cars that are not made in the United States will face a 25% tariff,” Trump said at the White House. “If they’re made here, there will be absolutely no tariff.”
The new measure, set to begin on April 2, will apply to foreign-made cars and light trucks, adding to the existing duties already placed on these goods. The decision follows a series of trade actions from the Trump administration, including tariffs on imports from major economic partners such as Canada, Mexico, and China, along with a 25% duty on steel and aluminum.
While Trump had previously granted automakers a temporary reprieve on tariffs for North American vehicles, that window is now closing. The uncertainty surrounding his trade policies has unsettled financial markets, with concerns that higher costs could ripple through the economy.
Ahead of the announcement, Wall Street reacted with a sharp downturn, with the Nasdaq sliding 2%. Auto stocks also felt the impact—General Motors fell 3.1%, while Ford managed a slight 0.1% gain.
Trade relations at risk
The administration has framed tariffs as a strategy to boost government revenue, revitalize US manufacturing, and pressure other nations on trade practices. However, the decision to target imported cars could create tensions with key allies, including Japan, South Korea, Canada, Mexico, and Germany— all major suppliers of vehicles to the US.
Currently, around half of all vehicles sold in the US are manufactured domestically. Among imports, Canada and Mexico account for nearly 50%, with Japan, South Korea, and Germany making up a significant portion of the remainder.
According to the Center for Automotive Research, tariffs on both automobiles and metal imports could drive up car prices by thousands of dollars, potentially impacting consumer demand and employment in the sector.
‘Liberation Day’ tariffs
Beyond the auto industry, Trump has signaled plans for additional tariffs targeting industries such as pharmaceuticals and semiconductors. On Wednesday, he reiterated his commitment to imposing duties on lumber and pharmaceutical imports.
The timing aligns with Trump’s self-declared “Liberation Day” on April 2, when he plans to introduce what he calls “reciprocal tariffs” tailored to specific trade partners to address what he considers unfair practices.
While the details of these upcoming measures remain unclear, the White House has indicated that discussions are ongoing. Trump suggested Monday that some countries might receive exemptions but did not provide specifics.
“I’ll probably be more lenient than reciprocal, because if I was reciprocal, that would be very tough for people,” Trump told Newsmax on Tuesday. However, he added that he would not grant too many exceptions.
With trade tensions escalating and global markets reacting, the full impact of these tariffs remains to be seen.
