President of the United States Donald Trump has announced a 25% tariff on imported cars and auto parts. This is his latest salvo in a wide range of trade wars that have reduced tensions with partners and allies.
Speaking at the White House on Wednesday, Trump said tariffs would “return” from foreign countries “depriving us of wealth” from those “away from our jobs.”
“They have taken so many from our country – friends and enemies. And frankly, friends are often far worse than enemies,” Trump said in his oval office.
“This is very reserved.”
Calling the move “exciting” and pledging to bring back manufacturing in the US, Trump said tariffs “spur growth in a way you’ve never seen before.”
The White House said in its fact sheet that tariffs set to take effect on April 2 “protect and strengthen” the U.S. automotive industry.
“The foreign automotive industry, strengthened by unfair subsidies and aggressive industrial policies, is expanding while US production is stagnating,” the White House said.
The White House said importers who bring vehicles and parts under the US-Mexico-Canada agreement have the opportunity to prove which parts of their products are made in the US, so that they only pay customs duties on “non-US content.”
Trade turmoil
Trump’s announcement sparked rapid criticism and expressions of concern from key trading partners, including the European Union, Canada and Japan.
Commission’s Ursula von der Leyen said tariffs were “bad for businesses” and “bad for consumers.”
“The EU will continue to seek negotiated solutions while protecting economic interests,” von der Reyen said in an X’s post.
Canadian Prime Minister Mark Carney described the move as a “direct attack” on Canadian workers.
“We protect our workers. We protect our companies. We protect our country. And we protect it together,” he said.
The Japanese Prime Minister said his government will consider “appropriate measures” in response to tariffs.
“Of course we’ll look at all options,” Isba said in a statement to Congress. “The bottom line means that we must consider what is most useful in Japan’s national interest.”
Trump’s move could cause major disruption in the global automotive industry, including the North American market, where U.S., Mexican and Canadian automakers developed highly integrated supply chains over decades of tariff-free trade.
“The North American automotive industry has evolved into well-oiled machines, and to get in the way it will only raise prices for all segments and reduce demand in the imports and domestically,” Autoforecast Solutions analyst Sam Fiorani told Al Jazeera.
Daniel Ives, head of technology research at Los Angeles-based Wedbush Securities, said the tariff would be a “hurricane-like headwind” for the industry if implemented as planned.
“We continue to believe that this is some form of negotiation and that these tariffs may change weekly, but we believe that this first 25% tariff from outside the US is a head-turning number that is barely acceptable to US consumers,” Ives told Al Jazeera.
“We hope to learn more over the next week, but for now, investors are mostly frustrated by this announcement. This tariff announcement/25% number is hard to digest.”
The US Auto Policy Council (AAPC) represents American automakers Ford, General Motors and Stellantis, and has said it will work to increase production in the US and will work with the administration on “durable policies” to benefit Americans.
“It is especially important that tariffs be implemented in a way that avoids consumer prices hikes and maintains the competitiveness of the integrated North American automotive sector, which has become a key success in the President’s USMCA agreement,” AAPC President Matt Blunt said in a statement.
According to the US Department of Commerce, the US imported passenger cars worth $214 billion in 2024.
Top auto exporters to the US include many of Washington’s closest partners and allies, including Mexico, Canada, South Korea, Japan and Germany.
Stocks in Japanese and South Korean automakers fell sharply on Thursday after US auto stocks had fallen earlier ahead of Trump’s announcement.
Japan’s Toyota, Honda and Nissan fell by 3.35% from 1.86% at 01:45 GMT, while South Korea’s Kia fell by 2.27%.
Tariffs are also likely to lead to rising car prices for US consumers, with about half of their purchases coming from overseas.
“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 US manufacturing jobs,” said Jennifer Safavian, president and CEO of Autos Drive America, in a statement responding to Trump’s announcement.
Trump’s latest tariff announcement comes within a week when he plans to reveal more “mutual” tariffs targeting countries deemed to be using the US for trade.
On Wednesday, Trump appears to be alleviating the severity of future tariffs, saying the measure was “very generous” and people were “surprising.”
“In many cases it’s less than the tariffs they’ve been charging us for decades,” he said.