Trump announces 25% tariff on all imported cars

In brief:

• 25% tariff on all imported cars and trucks takes effect April 2, including U.S. brands assembled overseas

• Industry groups and economists warn of price hikes, supply chain disruptions, and job losses

• Markets fall on news; tariffs add to growing list of protectionist trade moves under Trump

Details

President Trump is imposing a sweeping 25% tariff on all cars and trucks imported into the country, a move aimed at pressuring automakers to bring more manufacturing back to American soil.

The new tariffs, which take effect April 2, will apply even to American brands that build vehicles abroad and then ship them back to the U.S. for sale.

“Anybody who has plants in the United States, it’s going to be good for,” Mr. Trump said from the Oval Office, calling the move “very exciting.”

But industry leaders and economists said the tariffs could lead to significant price increases, limited vehicle choices, and job losses across the auto sector. Nearly half of all vehicles sold in the U.S. are imported, meaning the measure could raise prices for millions of consumers — some estimates suggest by as much as $10,000 per vehicle.

Industry pushback

Autos Drive America, which represents the U.S. operations of international automakers, condemned the tariffs, calling them "a direct hit" to both consumers and workers.

“The tariffs imposed today will make it more expensive to produce and sell cars in the United States,” the group said in a statement. “Ultimately leading to higher prices, fewer options for consumers, and fewer manufacturing jobs in the U.S.”

Ken Kim, senior economist at KPMG Economics, noted a “sizable jump” in vehicle and parts orders ahead of the tariff rollout, as automakers scrambled to stockpile materials. He warned that the long-term effect could see vehicle prices soar by thousands of dollars.

Trade tensions

The move also risks inflaming trade tensions, particularly with major automotive exporters like Japan, South Korea, and European nations, who could retaliate with their own tariffs on American-made goods.

Investors reacted negatively to the news. The S&P 500 fell over 1% by early afternoon, with most auto stocks down roughly 2%. Shares of American automakers, many of which rely heavily on global supply chains, also declined.

Another step

The auto tariffs come on top of a series of protectionist moves by the Trump administration, including:

• A 20% tariff on all Chinese imports

• A 25% tariff on most goods from Canada and Mexico, though some goods were later exempted under North American trade rules

• Planned “reciprocal tariffs” to match foreign trade barriers, set to be announced April 2

While the White House insists the policy will strengthen domestic manufacturing, critics argue it could weaken the very industry it aims to protect.