Live Updates: Trump Announces 25 Percent Tariffs on Imported Cars
The measure is intended to bring car factories to the United States but could increase prices for consumers significantly.
President Trump said on Wednesday that he would impose a 25 percent tariffs on all cars that are shipped into the United States.
The tariffs will go into effect on April 2, and will apply to finished cars and trucks that are shipped into the United States, including American brands whose automobiles are assembled overseas. The tariffs could raise prices for consumers significantly: Nearly half of all vehicles sold in the United States are imported.
The move is aimed at pushing companies to set up more factories into the United States, a primary goal for Mr. Trump, who called the move “very exciting" during remarks from the Oval Office.
“Anybody who has plants in the United States, it’s going to be good for,” Mr. Trump said.
But the tariffs could disrupt supply chains for carmakers, chill their investments and raise costs for consumers by thousands of dollars.
Autos Drive America, a group that represents the U.S. operations of international automakers, said that the car tariffs would increase prices at an uncomfortable moment for consumers, who are already reeling from high inflation.
“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 U.S.,” they said.
The measure also could spark more trade clashes with foreign countries, particularly European nations, Japan and South Korea, whose companies send many cars to the United States.
Here’s what else to know:
Investor reaction: Stock markets fell on news that the auto tariffs would be implemented, with shares in American automakers declining. The S&P 500 was down more than 1 percent in early afternoon trading. Most auto stocks were down around 2 percent.
Other tariffs: The car tariffs would come in addition to other expansive tariffs Mr. Trump has introduced in recent months. Since coming into office, Mr. Trump has added an additional 20 percent tariff to all U.S. imports from China. He also imposed a 25 percent tariff on almost all goods from Canada and Mexico, before exempting roughly half of those imports, for the goods that trade under the rules of the North American trade agreement. Mr. Trump plans to introduce further levies on April 2, when he has said he will announce “reciprocal tariffs” that match the high tariffs and other trade barriers that other countries impose on American exports.
Rising costs: Ken Kim, a senior economist at KPMG Economics, said in a note Wednesday that he had seen a “sizable jump” in orders for vehicles and parts in February, as the car industry put in more orders before tariffs on steel and aluminum would come into effect. He cited industry estimates saying that the price of a new vehicle would increase by several thousand dollars — perhaps more than $10,000 — because of tariffs.
Flavio Volpe, the president of the Automotive Parts Manufacturers Association of Canada, said that if his members’ products were included under the tariff, the industry would likely shut down within a week throughout North America. “He is using a really blunt instrument,” Volpe said of President Trump. “One million cars in Canada a year are made by American manufacturers with 50 percent American parts and 55 percent of American raw materials, and he’s ready to push them off a cliff to make a point no one understands.”
In recent weeks, Japanese officials and lobbyists have tried to make their case in Washington for why Japanese cars should be exempt from tariffs. They have emphasized how much Japanese auto manufacturers invest in the United States and how tariffs could hurt American consumers by raising prices. Japanese companies operate 24 automobile manufacturing plants in the United States.
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Ursula von der Leyen, president of the European Commission, says in a statement that she deeply regrets the U.S. decision to impose tariffs on European automotive exports. She also says that Europe will “assess this announcement, together with other measures the U.S. is envisaging in the next days,” and will continue to seek a negotiated solution.
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.
Trump on Wednesday said he could give China “a little reduction in tariffs” in exchange for any approvals necessary to orchestrate the sale of TikTok. Federal law requires the owner of TikTok, ByteDance, to divest in the app or face a shut down, but Trump issued an order to delay the law. He also told reporters he could extend that delay if necessary.
Shares of major carmakers fell even further in postmarket trading after President Trump’s announcement of tariffs on imported cars. Ford, which had ended the day modestly higher, fell more than 2 percent. General Motors tumbled an additional 5 percent, while Toyota fell almost 2 percent.
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SKIP ADVERTISEMENTThis tariff announcement is bad news for Europe, especially for Germany. In 2024, European automakers sent 38.4 million euros’ worth of cars across the Atlantic, and German automakers account for the bulk of the exports.
And that comes at a time when the economy has been only staggering along. Auto tariffs “will definitely be a big bummer for the recently returned optimism in Europe,” said Carsten Brzeski, the global head of macro for ING Research.
Tesla will suffer less from the tariffs than most other automakers because it makes all the cars it sells in the United States in California and Texas. But President Trump said that Elon Musk, the chief executive of Tesla and a ubiquitous presence at the White House, did not influence tariff policy. “He’s never asked me for a favor in business whatsoever,” Trump said.
Tesla would have been hit much harder if the tariffs had applied to components rather than just to finished vehicles. Like all other carmakers, Tesla imports significant numbers of parts and would have had to raise prices to cover the cost of tariffs.
The Canadian Chamber of Commerce said in a statement that the auto tariffs would harm the U.S., as well as other countries: “Throwing away tens of thousands of jobs on both sides of the border will mean giving up North America’s auto leadership role, instead encouraging companies to build and hire anywhere else but here. This tax hike puts plants and workers at risk for generations, if not forever.” The North American auto supply chain has been integrated since 1965, they said.
For Japan, automobile exports are a major part of the national economy. Cars are the country’s top export, and some economists estimate that Trump’s automotive tariffs could wipe out 40 percent of potential growth this year.
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SKIP ADVERTISEMENTAsked if the car tariffs could be removed, Trump says they are permanent, “100 percent.”
Trump said he was not particularly concerned about the dip in markets that preceded his tariff announcement today. “That’ll all take care of itself,” he said. In his first term, at least, Trump paid considerable attention to the daily fluctuations of the stock market.
Despite Trump’s confidence, he did wait until after markets closed to make the announcement.
Trump says that car tariffs will go “into effect” on April 2, and that tariff revenue will be collected starting on April 3. He also calls current auto supply chains that snake across borders “ridiculous.” Those chains, he says, are going to lead to cars that are “made in one location.”
As Trump announces his tariffs, his administration is also working with Republicans on a major package to extend his expiring tax cuts. The president said Wednesday he was still pushing for a deduction for auto loan interest “but only if the car is made in America.”
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SKIP ADVERTISEMENTThe United States is the biggest market for the Japanese automakers Toyota, Honda, Nissan, Mazda and Subaru. The companies have extensive American production networks but still rely on exports: Of the 2.3 million cars Toyota sold last year in the United States, about one million were made outside the country.
Executives at Nissan and Honda have warned in recent news conferences that Trump’s tariffs could carve deeply into their earnings
Trump also says the U.S. will be putting tariffs on imported pharmaceuticals and lumber. He has already begun a trade investigation into lumber, but has yet to do that for pharmaceuticals.
President Trump says the tariffs will lead to “tremendous growth in the auto industry.” He also says that prices will go down, which is the opposite of what most analysts expect.
After months of threats, the White House unveiled plans on Wednesday to impose tariffs on automobiles imported to the United States, a plan that is likely to hit car companies across the European Union hard.
The move — which would place a 25 percent tariff on all cars not built in the United States — could ramp up pressure on Europe to respond with countermeasures.
European Union officials have already announced plans to allow tariffs that were instituted during President Trump’s first term to snap back into place, and have said they will place a new set of tariffs on a wide variety of American goods — from lingerie to soy products — by mid-April.
But those measures were a response to steel and aluminum tariffs. And their first wave, meant to hit American whiskey and motorcycles, was delayed to allow for more negotiating time and over fears of a stark American response that could crush European wine and Champagne exports.
The latest U.S. move may intensify the urgency for the European Union to retaliate. Automotive tariffs could squeeze an industry that is already vulnerable — especially in Europe’s biggest economy, Germany, which sends American consumers cars from companies like Volkswagen, Mercedes-Benz and BMW. That makes the tariffs a serious escalation in a trade war that has already left Europe scrambling.
“We will need to assess the action taken by the U.S. and keep a flexible approach so as to calibrate our response accordingly,” Maros Sefcovic, the trade commissioner for the European Commission, the executive arm of the European Union, said in a recent speech.
The United States is the European Union’s largest export market for cars, accounting for nearly a quarter of all its exported vehicles.
In 2024, European automakers sent 38.4 million euros’ worth of cars across the Atlantic, down 4.6 percent from the previous year, according to the European automobile makers association, ACEA.
Auto tariffs “will definitely be a big bummer for the recently returned optimism in Europe,” said Carsten Brzeski, the global head of macro for ING Research. In particular, they could “hurt German exports and increase chances of a continued stagnation.”
The biggest three German carmakers make up about 73 percent of the European Union’s automotive exports to the United States, according to the research firm JATO Dynamics.
And the United States is the most important export market for Germany’s auto industry. Nearly one of every three Porsches is exported to the United States, while one of every six BMWs is shipped there. Mercedes, Volkswagen and Audi (a subsidiary of the Volkswagen Group) have production sites in the United States and Mexico, but they would be hard hit by the increase in tariffs.
BMW warned this month that it expected that the growing trade conflicts would cost the company $1 billion this year.
“If you overdo it with tariffs, it sends a negative spiral to all market participants,” Oliver Zipse, the chairman of BMW, told Bloomberg. There are “no winners in that game.”
Cars are just one sector facing steep tariff increases. On top of the tariffs on steel and aluminum, the United States is planning to announce what the administration calls “reciprocal” tariffs next Wednesday.
The goal of those, the administration says, is to equalize tariff rates between various nations and America.
Mr. Sefcovic, the E.U. trade commissioner, and Bjoern Seibert, the head of cabinet for the commission’s president, visited Washington on Tuesday to talk to their American counterparts — Howard Lutnick, the commerce secretary, and Jamieson Greer, the U.S. trade representative.
On Wednesday, European ambassadors heard an account of those meetings, according to three diplomats who spoke on condition of anonymity because the talks were private.
The takeaway was that reciprocal tariffs could be in the double digits, two of the diplomats said — perhaps even 20 percent or higher, one added, though the figure was uncertain. The tariffs would apply across the board for E.U. countries.
Although the European Union has a relatively low tariff rate on average, the United States has signaled that it will take other factors into account when calculating reciprocal tariffs — including value-added taxes. Those are consumption taxes added to a good or service at each stage of production, and they are given back to the exporter if a product is exported. Mr. Trump has been a longtime critic of those policies.
“The EU’s priority is a fair, balanced deal instead of unjustified tariffs,” Mr. Sefcovic said on X after his meetings this week. “We share the goal of industrial strength on both sides.”
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SKIP ADVERTISEMENTPresident Trump says the tariff will encourage more carmakers to come invest in the United States. “They’re already looking for sites,” he says.
President Trump says he will place a 25 percent tariff on all cars that are not built in the United States.
The current U.S. tariff on foreign cars is 2.5 percent, so that’s a substantial increase. About half of all cars sold in the United States are imported.
While we’re waiting for auto tariffs, we’ve got some news out of Europe about the next batch of tariffs, the so-called “reciprocal” ones that are expected on April 2.
Two European Union officials met with their American counterparts in Washington this week. Ambassadors heard a summary of that meeting, according to people familiar with the briefing. The upshot is that Europe could be facing double-digit tariff rates, though the exact number is uncertain, and they are expected to take effect almost immediately, on April 3.
We’re waiting for the president to make remarks about auto tariffs. I covered Trump’s national security investigation into auto imports in his first term, and it’s hard to underscore how different this feels today. In 2019, the idea that the president would put substantial tariffs on such a major import, and that car imports would threaten national security, were hugely controversial. Now it’s just a normal Wednesday.
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SKIP ADVERTISEMENTThe expected auto tariffs come as two major plants near Toronto are temporarily closed. Stellantis said last month it was pausing a $900 million retooling of its factory in Brampton, Ontario, that was going to make gasoline- and electric-powered versions of the Jeep Compass. After Ford set aside plans to produce electric vehicles in Oakville, Ontario, that factory is not scheduled to start producing F-Series Super Duty pickup trucks until next year. Two Ford engine plants in Windsor, Ontario, currently make engines that are sent to American factories that now build those trucks.
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SKIP ADVERTISEMENTThe auto tariffs that President Trump will unveil on Wednesday afternoon are the latest salvo in an increasingly chaotic trade policy strategy that has included sweeping levies on imports from American allies and adversaries.
Since taking office in January, Mr. Trump has already imposed 20 percent tariffs on imports from China, 25 percent tariffs on many imports from Canada and Mexico and 25 percent tariffs on steel and aluminum imports from around the world.
The auto tariffs are just an appetizer for even broader tariffs that are expected to be announced next week. That is when the Trump administration plans to enact “reciprocal” tariffs on imports from countries around the world. Those tariffs, which Mr. Trump has said are intended to match the import taxes that other nations impose on American products, will be based on a new set of metrics that include not only tariff rates but also a country’s business environment, its taxes and the strength of its currency.
Mr. Trump and his advisers have argued that the tariffs are necessary to protect national security and to respond to unfair trade practices that have harmed American workers. But the tariffs have also rattled markets and triggered retaliation from major trading partners, such as the European Union and Canada.
Economists have warned that the tariffs could create another bout of rising prices and slow economic growth just as the U.S. economy was carefully navigating a so-called soft landing after a surge of inflation during the Biden administration.
Despite his commitment to tariffs as a cure-all for most policy problems, Mr. Trump has acknowledged that they could cause some temporary pain for American consumers, farmers and businesses. In some cases, he has offered to delay the levies or offer exceptions after pressure from industry groups.
Top economic officials, including Treasury Secretary Scott Bessent, have insisted that any price increases will be a temporary “price adjustment” that is necessary for reorienting a broken trading system.
Democrats have seized on the volatility surrounding the tariffs to argue that Mr. Trump’s trade whims are destructive to workers and weighing on consumer confidence.
“How can Americans feel confident when Donald Trump starts, stops, starts, and changes his position on tariffs?” Senator Chuck Schumer, the minority leader, said on Wednesday.
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Stocks slumped on Wednesday ahead of President Trump’s expected announcement of tariffs on auto imports, as investors braced for levies that could disrupt carmakers’ supply chains and raise costs for consumers.
The S&P 500 fell roughly 1.1 percent for the day, and the tech-heavy Nasdaq Composite was 2 percent lower. The downturn reflected ongoing volatility in the stock market, which has been fueled by Mr. Trump’s whiplash on trade policies and concern among investors that sweeping tariffs could reignite inflation and slow down the U.S. economy.
Shares of most automakers dropped after the White House press secretary said Mr. Trump would announce new auto tariffs Wednesday afternoon. General Motors was down more than 3 percent for the day and Toyota fell nearly 2 percent, while Ford’s stock ended slightly higher, erasing its modest losses from earlier in the day. Shares of Tesla, which bounced on Monday after plunging earlier this month, were more than 5 percent lower for the day.
Details of the tariffs remained unclear on Wednesday afternoon, including whether they would apply broadly to all imports of cars and car parts, or be more narrowly tailored.
The stock market has dropped over the past month, a wave of selling that at one point left the S&P 500 more than 10 percent below its Feb. 19 peak. Despite some recent daily gains, Wall Street sentiment continues to be dampened by concerns that Mr. Trump’s tariffs and a trade war could push prices sharply higher, discourage consumers and damage the economy.
Automakers have been preparing for higher tariffs on cars since President Trump’s inauguration in January, but they are still likely to struggle to adapt to the new 25 percent duty on imported vehicles that he announced on Wednesday.
Some manufacturers like Ford Motor, Hyundai and Stellantis may see a temporary benefit from the tariffs because they have many unsold vehicles on dealer lots. Vehicle shortages caused by tariffs will allow them to clear inventory without cutting prices.
But that benefit would be short-lived.
Carmakers may be able to blunt some of the impact of tariffs by changing which models they make at their U.S. and overseas factories. Many manufacturers have designed factories to produce different models on the same assembly line and can theoretically start making cars that they had previously imported into the country.
“Changes in production are always an option,” said Jörg Burzer, a member of the management board at Mercedes-Benz who oversees production at the German automaker.
But it will not be possible for Mercedes to completely avoid the impact of tariffs, which will substantially raise new car prices. Tariffs “would definitely add to the cost, that’s clear,” Mr. Burzer said in an interview in Berlin last week.
In an effort to appease the Trump administration, some foreign carmakers have pledged to expand their manufacturing operations in the United States.
Hyundai Motor said during an event with Mr. Trump at the White House on Monday that it would invest $21 billion in the United States during the next four years. The South Korean company, which already has large factories in Georgia and Alabama, said the new investments would include a factory in Louisiana to produce steel for Hyundai, Kia and Genesis cars.
Mercedes-Benz, which produces sport-utility vehicles in Alabama, plans to expand its U.S. operations, Ola Källenius, the chief executive of Mercedes, said in an interview in Rome this month. “We are 100 percent committed to the United States and will continue to be so and are poised to do more,” Mr. Källenius said, without giving specifics.
Mr. Källenius acknowledged that there was a disparity between the tariffs that Europe and the United States imposed on auto imports. The United States charges a 2.5 percent tariff on cars from Germany and other European Union countries, while the European Union charges a 10 percent tariff on American cars.
“Why not go zero-zero?” Mr. Källenius asked.
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SKIP ADVERTISEMENTNew cars will probably become much more expensive in the United States after President Trump imposed a new 25 percent tariff on foreign-made cars.
Cox Automotive, a research firm, estimates that tariffs would add $6,000 to the price of a car made in Mexico or Canada, two of the top exporters of vehicles to the United States. Affected models include the Toyota Tacoma pickup, gasoline and electric versions of the Chevrolet Equinox, and several models of Ram pickups. Ram is owned by Stellantis, which also produces Dodge, Chrysler and Fiat vehicles.
In addition to Canada and Mexico, the United States imports many cars from Japan and South Korea. Smaller numbers come from European countries, including Germany, Italy, Sweden and Britain.
Higher prices will deter buyers and force automakers to curtail production, said Jonathan Smoke, chief economist at Cox Automotive. He forecast that U.S. factories would produce 20,000 fewer cars per week, about 30 percent less than usual.
“By mid-April we expect disruption to virtually all North American vehicle production,” Mr. Smoke said on Wednesday during a conference call with clients and reporters. “Bottom line: Lower production, tighter supply and higher prices are around the corner.”
In addition to the impact on car buyers, tariffs could hurt Americans who are employed in factories and car dealerships.
About one million people in the United States are employed in auto and parts manufacturing, according to the Bureau of Labor Statistics. Two million more work at dealerships that sell cars or parts. If automakers are forced to significantly reduce production, they are likely to furlough workers at factories, and dealers would have to cut jobs if higher prices hurt sales.
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