U.S. President Donald Trump on Wednesday announced plans for long-promised tariffs of up to 25% on automotive imports, widening the global trade war he kicked off upon regaining the White House this year in a move auto industry experts expect will drive up prices and stymie production.
"What we're going to be doing is a 25% tariff for all cars that are not made in the United States," Trump said at an event in the Oval Office. "We start off with a 2.5% base, which is what we're at, and go to 25%."
Trump, who sees tariffs as a tool to raise revenue to offset his promised tax cuts and to revive a long-declining U.S. industrial base, said the new import taxes will go into effect on April 2, the same date he plans to announce reciprocal tariffs aimed at the countries responsible for the bulk of the U.S. trade deficit. Collection of the new auto tariffs would begin on April 3.
Regarding the coming April 2 announcement, Trump indicated the measures may not be the like-for-like levies he has been pledging to impose.
"We're going to make it very lenient," Trump said. "I think people will be very surprised. It'll be, in many cases, less than the tariff they've been charging for decades."
STOCKS FALL
Shares of U.S.-listed automakers fell on news of the press conference on concerns that tariffs would send shock waves through a global auto industry that is already reeling from uncertainty caused by Trump's rapid-fire tariff threats and occasional reversals.
The U.S. stock market also closed lower on worries over tariffs, which have dogged investors for much of the last month. The benchmark S&P 500 Index (.SPX) fell 1.1% ahead of the press conference, and is down more than 4% so far in March for its worst monthly performance in nearly a year.
Since taking office on January 20, Trump has announced and delayed tariffs on Canada and Mexico for what he alleges is their role in allowing the opioid fentanyl into the U.S.; set import taxes on goods from China for the same reason; launched hefty duties on imports of steel and aluminum; and has repeatedly touted his plans to announce global reciprocal tariffs on April 2.
Tariffs could also drive costs of cars higher for consumers by thousands of dollars, hitting new vehicle sales and resulting in job losses, since the U.S. automotive industry relies heavily on imported parts, according to the Center for Automotive Research.
The U.S. imported $474 billion worth of automotive products in 2024, including passenger cars worth $220 billion. Mexico, Japan, South Korea, Canada and Germany, all close U.S. allies, were the biggest suppliers.
