President Donald Trump and the White House announced a series of tariffs on foreign-made cars and auto parts on Wednesday.
Many details remained unclear about the tariffs, which still sparked criticism from foreign governments and hit the automaker’s stocks. Trump’s initial statement on tariffs was updated immediately by a fact sheet posted on the management staff and the White House website.
Speaking from the oval office, Trump initially said he was leviing a 25% tariff on every vehicle entering the country. The White House later revealed that foreign auto parts would be taxed at a 25% tax rate, even if the vehicle they contain was assembled domestically.
However, companies importing vehicles under the US-Mexico-Canada Agreement (USMCA) will undergo special consideration until the Department of Commerce establishes a process that places a 25% obligation on them, the White House said.
USMCA-compliant auto parts will remain free of tariffs until the Secretary of Commerce establishes a process for applying tariffs to non-US content in consultation with US Customs and Border Protection.
Trump said he hopes the car company will move to the US, building new sites and expanding existing sites. He said it was a company that opened facilities in Canada and Mexico in recent decades, and was costly for US workers.
“If you build a car in the US, there are no customs duties,” he said.
Tariff collection began on April 3rd, and Trump said it would be “permanent.” He argued that the US could raise up to $100 billion from tariff revenue.
Stocks of top US automakers fell sharply in the announcement of after-hours trading, with General Motors down over 7%, 4.6% off and Stellantis down 4%.
Stocks of Asian carmakers also fell during trading Thursday, Reuters reported that Japanese carmakers Nissan, Toyota and Honda have closed 2.2%, 2.7% and 3% respectively. In Korea, both Hyundai Motor and Kia fell by about 4%.
In a statement, Jennifer Safavian, president and CEO of Autos Drive America, a trade group representing the US operations of international automakers, said:
Foreign leaders and automakers also criticized tariffs. The Japanese Prime Minister said that Isba’s government was responding “with all options on the table,” but the German Automotive Industry Association said tariffs “sent a disastrous signal for free, rule-based trade.”
Canadian Prime Minister Mark Carney called the tariffs a “direct attack” on Canadian workers and said he is considering additional retaliatory tariffs. European Commission President Ursula von der Leyen deeply regrets the US decision and said the European Union “continue to seek negotiated solutions while protecting economic interests.”
In a post on his true social platform early Thursday, Trump said “if the European Union works with Canada to inflict economic harm on the US, it will place large tariffs on both, much larger than planned.”
The American Auto Policy Council, representing Ford, General Motors and Stellantis, said “it is important that tariffs be implemented to avoid a rise in consumer prices” while committing to increasing U.S. automobile production.
According to Cars.com, the top 10 “most American” vehicles with US-based parts and assembly are foreign-owned businesses. The complete list of the most American-made brands can be found here.
“Automobile shoppers are always surprised that bonnet badges don’t always reveal the economic contribution of the vehicle. In fact, 66% of cars.com’s 2024 American-made index vehicles come from foreign automakers supporting communities in Alabama, Indiana, Michigan and Ohio.”
Half of all vehicles sold in the US in 2023 were imported, according to Cars.com. According to Autoweek, popular cars that see some or all models assembled overseas include:
Audi Q5Buick encore gxchevrolet Silverado 1500Chrysler Pacifica and Voyagerford Maverickford Bronco Sportford Mustang Mastang Mach-Egmc Terrainram 1500 and 2500VW Jetta, Taos and Tiguan
A 25% tariff almost certainly increases the cost of the affected vehicle.
“If a 25% tariff is imposed, the price will be up to $12,000 for some models or just $4,000 for others, and in both cases there is almost certainly an increase in costs that will be carried over to US buyers,” Autoweek said.
Alongside Tesla’s assembly plant in Fremont, California, the South is increasingly pushing the Midwest as a growing hub for American automotive manufacturing.
The new obligation was announced a week before Trump’s planned “liberation date” on April 2nd. He has pledged to roll out new tariffs on many of America’s biggest trading partners, including longtime allies, to affect a wide range of goods. Trump recently hinted that another statement on car rates could come ahead of next week.
Previously, Trump has shown he is open to pleas from American automakers that tariffs would harm their business. He gave them a month off their duties in Canada and Mexico, and eventually evolved to indefinitely waive taxation on all items covered by the US-Canada free trade agreement.
Trump’s repeated Off-Ayjan announcements have rocked markets in recent weeks and ratcheted economic uncertainty. This led to a decline in business and consumer trust.