United States President Donald Trump has announced a 25 percent tariff on imported cars and car parts, his latest salvo in a widening trade war that has stoked tensions with partners and allies.
Speaking at the White House on Wednesday, Trump said the tariffs would “take back” money from foreign countries that have been “taking our jobs” and “taking our wealth”.
“They’ve taken so much out of our country – friend and foe. And, frankly, friend has oftentimes been much worse than foe,” Trump said at the Oval Office.
“This is very modest.”
Calling the move “exciting”, Trump, who has pledged to revive manufacturing in the US, said the tariffs would “spur growth like you haven’t seen before”.
The White House said in a fact sheet that the tariffs set to take effect on April 2 would “protect and strengthen” the US auto industry, which it claimed had been “undermined by excessive imports threatening America’s domestic industrial base and supply chains”.
“Foreign automobile industries, bolstered by unfair subsidies and aggressive industrial policies, have expanded, while US production has stagnated,” the White House said.
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The White House said importers bringing in vehicles and parts under the United States-Mexico-Canada Agreement would have the chance to certify what portion of their products are US-made so that they only pay the tariff on “non-US content”.
Trade disruption
Trump’s announcement drew swift condemnation and expressions of concern from key trading partners, including the European Union, Canada and Japan.
European Commission President Ursula von der Leyen said the tariffs would be “bad for businesses” and “worse for consumers”.
“The EU will continue to seek negotiated solutions, while safeguarding its economic interests,” von der Leyen said in a post on X.
Canadian Prime Minister Mark Carney described the move as a “direct attack” on Canadian workers.
“We will defend our workers. We will defend our companies. We will defend our country – and we will defend it together,” he said.
Japanese Prime Minister Shigeru Ishiba said his government would consider “appropriate measures” in response to the tariffs.
“Naturally, we will consider all options,” Ishiba said in remarks to parliament. “The bottom line is that we must consider what will best serve the national interests of Japan.”
Trump’s move is likely to cause significant disruption to the global auto industry, including the North American market, where automakers in the US, Mexico and Canada have developed highly integrated supply chains over the course of decades of tariff-free trade.
Daniel Ives, the head of technology research at Los Angeles-based Wedbush Securities, said the tariffs would be a “hurricane-like headwind” for the industry if implemented as planned.
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“We continue to believe this is some form of negotiation and these tariffs could change by the week, although this initial 25 percent tariff on autos from outside the US is almost an untenable head-scratching number for the US consumer,” Ives told Al Jazeera.
“We expect to learn more over the next week, but for now, investors will be frustrated by this announcement with few details … as this tariff announcement/25 percent number is hard to digest.”
The American Automotive Policy Council (AAPC), which represents US carmakers Ford, General Motors and Stellantis, said it was committed to increasing production in the US and would work with the administration on “durable policies” to benefit Americans.
“In particular, it is critical that tariffs are implemented in a way that avoids raising prices for consumers and that preserves the competitiveness of the integrated North American automotive sector that has been a key success of the President’s USMCA agreement,” AAPC President Matt Blunt said in a statement.
The US imported $214bn worth of passenger cars in 2024, according to the US Department of Commerce.
Top auto exporters to the US include many of Washington’s closest partners and allies, including Mexico, Canada, South Korea, Japan and Germany.
Shares of Japanese and South Korean carmakers fell sharply on Thursday, following earlier declines in US auto stocks ahead of Trump’s announcement.
Japan’s Toyota, Honda and Nissan were down between 1.86 percent and 3.35 percent as of 01:45 GMT, while South Korea’s Kia was down 2.27 percent.
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The tariffs are also likely to lead to higher car prices for US consumers, about half of whose purchases come from abroad.
“The tariffs imposed today will make it more expensive to produce and sell cars in the United States, ultimately leading to higher prices, fewer options for consumers, and fewer manufacturing jobs in the US,” Jennifer Safavian, president and CEO of Autos Drive America, said in a statement responding to Trump’s announcement.
Trump’s latest tariffs announcement comes less than a week before he is due to unveil further “reciprocal” tariffs targeting countries deemed to be taking advantage of the US on trade.
On Wednesday, Trump appeared to play down the severity of the upcoming tariffs, saying the measures would be “very lenient” and that people would be “surprised”.
“It’ll be, in many cases, less than the tariff that they’ve been charging us for decades,” he said.