President Donald Trump on Wednesday said he would impose 25% tariffs on “all cars that are not made in the United States.”
Trump said that there is “absolutely no tariff” for cars that are built in the U.S.
The new tariffs were codified in a presidential proclamation that Trump signed in the Oval Office. They will go into effect April 2, and “we start collecting April 3,” he said.
Trump White House aide Will Scharf said that the new tariffs apply to “foreign-made cars and light trucks.” He clarified that they come in addition to duties that are already in place.
Scharf said the tariffs will result in “over $100 billion of new annual revenue” to the U.S.
Specifics about the proclamation were not immediately clear. Most vehicles are assembled from thousands of parts that may originate from dozens of different countries.
Trump said there will be “very strong policing” on which parts of a car to hit with tariffs.
European Commission President Ursula von der Leyen quickly criticized the new U.S. tariffs and vowed that the European Union “will continue to seek negotiated solutions, while safeguarding its economic interests.”
“Tariffs are taxes – bad for businesses, worse for consumers equally in the US and the European Union,” she said in a statement.
Auto stocks fell in after-hours trading following Trump’s announcement. Shares of General Motors, Stellantis and Ford Motor all lost roughly 5% in extended trading.
Trump on March 5 gave those automakers — known as the “Big Three” — a one-month exemption from his 25% tariffs on Mexico and Canada for vehicles that comply with an existing North American trade deal known as the USMCA.
Trump had previously hinted that new auto tariffs could arrive before April 2, the day his sweeping “reciprocal tariff” plan is set to begin.
“We’ll be announcing that fairly soon over the next few days, probably, and then April 2 comes, that’ll be reciprocal tariffs,” he said at a Cabinet meeting Monday.
Trump has long signaled his plans to impose heavy tariffs on foreign trading partners. But his unpredictable and frequently shifting policy rollouts have stirred turmoil in the stock market and left business leaders uncertain about how to plan for the future.
Trump has hyped April 2 as “liberation day” and “the big one.” His plan, as originally described, would slap reciprocal tariffs on all countries that have their own import duties on U.S. goods, while also imposing tariffs in response to other disfavored trade policies, such as the use of value-added taxes.
But Trump and his officials have recently suggested that the tariffs coming April 2 could end up being softer than they first appeared.
Trump said Friday that “there’ll be flexibility” on those tariffs, and on Tuesday night suggested the duties will be more “lenient than reciprocal.” Treasury Secretary Scott Bessent said last week that countries can pre-negotiate with the U.S. to avoid facing new tariffs on April 2.
World reaction
Direct attack
“This is a direct attack,” Canada’s Prime Minister Mark Carney told reporters, adding that because of the tariffs the historic ties between Canada and the U.S. “are in the process of being broken.” Carney said that he will be talking with members of his administration on Thursday to determine what steps Canada will take in response, suggesting that further retaliatory tariffs against the United States are likely.
A mistake
One Republican who outright opposed Trump’s new tariffs was Senator Rand Paul of Kentucky, who has frequently spoken out in defense of free trade and called the new 25 percent levies “a mistake.”
“I think it’s a terrible idea,” Paul said, adding that it will be “bad for the economy” and “raise the price of cars.” He pointed out that the markets already slumped before Trump signed the order. “Trade is good for our country and good for prosperity.”
Wreak havoc
The new tariffs could potentially wreak havoc on Mexico’s automotive industry. A pillar of the economy, the sector accounts for about 5 percent of Mexico’s gross domestic product and employs about 1 million people, according to Capital Economics. Mexico exported about $181 billion in vehicles and parts last year to the United States, up from $173 billion in 2023.
Pain
Doug Ford, the premier of Ontario, the province that is home to Canada’s auto industry, said that he told Canada’s prime minister, Mark Carney, that he supported retaliatory tariffs. “We’re going to make sure that we inflict as much pain as possible on the American people,” he told reporters.
Bad for Europe
This tariff announcement is bad news for Europe, especially for Germany. In 2024, European automakers sent 38.4 billion euros’ worth of cars across the Atlantic, and German automakers account for the bulk of the exports.
CNBC/NYT