Trump Announces 25% Tariff on Imported Automobiles
WASHINGTON — President Trump announced Wednesday the imposition of a 25% tariff on imported automobiles. The White House argues this measure will boost domestic manufacturing, though it could strain automakers reliant on international supply chains.
“This will encourage continued growth,” Trump stated to reporters. “We will be implementing a 25% tariff.”
The tariffs could create complications, as even American car manufacturers source parts globally. This could lead to increased costs and decreased sales. General Motors’ stock decreased roughly 3% in trading Wednesday afternoon. Ford’s stock saw a slight increase. Stellantis, which owns Jeep and Chrysler, experienced a share drop of almost 4%.
Trump has frequently stated that tariffs on imported vehicles would be a key policy of his administration, predicting that the resulting costs would incentivize more production to move to the U.S. However, both American and international automakers with facilities in the United States still depend on parts and complete vehicles from countries like Canada and Mexico. This reliance could lead to higher auto prices and reduced sales, as constructing new factories requires time.
“We will be implementing automobiles, which has been known about for a while,” Trump said Monday. “The announcement should be coming soon, most likely in the next few days.”
These auto tariffs are part of Trump’s broader strategy to reshape global trade relationships. He also intends to implement what he terms “reciprocal” taxes on April 2, designed to match the tariffs and sales taxes imposed by other countries.
Trump has already put a 20% import tax on all goods from China, citing their role in fentanyl production. Similarly, he imposed tariffs of 25% on Mexico and Canada, with a 10% tax on Canadian energy. Some of the tariffs on Mexico and Canada, including those on autos, have been suspended after objections from automakers, with Trump granting waivers that are set to expire in April.
The president has also imposed 25% tariffs on all steel and aluminum imports, removing the exemptions from his earlier 2018 taxes on the metals. Tariffs are also planned for computer chips, pharmaceutical drugs, lumber, and copper.
These taxes risk provoking a wider global trade conflict, potentially harming economic growth and increasing prices for consumers and businesses, as importers may pass on some of the tax costs. After the European Union announced plans for a 50% tariff on U.S. spirits, Trump responded by considering a 200% tax on EU alcoholic beverages.
Trump also intends to place a 25% tariff on countries that import oil from Venezuela, despite the fact that the United States also imports oil from the nation.
Trump’s advisors claim the tariffs on Canada and Mexico are intended to curb illegal immigration and drug trafficking. However, the administration also seeks to use the tariff revenue to reduce the budget deficit and reinforce America’s position as the world’s leading economy.
The president referenced plans by South Korean automaker Hyundai to construct a $5.8 billion steel plant in Louisiana on Monday, citing it as evidence that tariffs would bring back manufacturing jobs.
Slightly more than a million people are employed in the manufacturing of motor vehicles and parts in the U.S., a decrease of approximately 320,000 since 2000, according to the Bureau of Labor Statistics. An additional 2.1 million people are employed at auto and parts dealerships.
The United States imported nearly 8 million cars and light trucks in the last year, with a value of $244 billion. The primary sources of these vehicles were Mexico, Japan, and South Korea. Imports of auto parts exceeded $197 billion, with Mexico, Canada, and China being the top suppliers, according to the Commerce Department.
AP reporter Paul Wiseman contributed to this report.