President Donald Trump has announced new 25% tariffs on imported cars and auto parts, set to take effect in phases starting 2 April. Vehicle tariffs will apply immediately, while parts tariffs—excluding those from Canada and Mexico for now—will begin in May or later.
Trump framed the move as a boon for American manufacturing, claiming it would drive “tremendous growth,” jobs, and investment. However, analysts warn of potential short-term factory shutdowns, higher consumer prices, and strained trade relations. The policy could disrupt global supply chains, particularly for the $240bn annual US car import market, which accounts for half of domestic sales.
Mexico, South Korea, Japan, Canada, and Germany—the top suppliers—face direct impacts. US automakers with cross-border operations, like GM and Stellantis (owner of Jeep and Chrysler), saw shares drop 3-3.6% ahead of the announcement. Tesla CEO Elon Musk acknowledged the tariffs would “significantly” affect his company.
While Canada and Mexico gain temporary exemptions on parts tariffs, the White House noted duties may apply once border systems are updated. Japan’s prime minister vowed to consider “all options,” as shares in Toyota, Nissan, and Honda slid.
Trump defended the “permanent” tariffs, stating, “If you build your car in the United States, there is no tariff.” Yet economists warn the costs—up to $10,000 per vehicle for some models—could ripple through the industry.
