Donald Trump imposes 25% tariffs on auto imports

The new tariff of 25 per cent applies to all passenger vehicles and light trucks imported to the US, the White House specifies. It adds that “key automobile parts” are also concerned, adding that that includes “engines, transmissions, powertrain parts, and electrical components.” All in the name of protecting “national security.”

Specifically, Washington states that “President Trump is taking action to end unfair trade practices that jeopardize US national security,” adding that “legislation, pre-existing trade agreements like the USMCA [USA-Mexico-Canada], revisions to the U.S.-Korea Free Trade Agreement, and subsequent negotiations have not sufficiently mitigated the threat to national security posed by imports of automobiles and certain automobile parts.”

Another key aspect is that Trump is trying to bring manufacturing to the US and strengthen the US economy. The number of jobs in automotive parts manufacturing is falling steadily, the White House noted in its brief. It also says 50 per cent of cars bought in 2024 were imports (around 8 million vehicles). And of the remaining eight million “not imported” units, “the average domestic content is conservatively estimated at only 50% and is likely closer to 40%.”

“This is permanent,” the US President said after signing the new directive. Nevertheless, previous tariffs were not. Trump first imposed tariffs on all goods from Canada and Mexico in February, but suspended them. He then imposed them again in March only to exempt automakers hours later. But: He had said from the very beginning that tariffs on car imports would come into effect on 2 April and that they would be around 25 per cent.

Nevertheless, this is bad news for the automotive industry in the US. Several companies have manufacturing facilities in Mexico and import their vehicles or components into the US duty-free. Some OEMs also use Canada as a production location to supply the US market. Volkswagen plans to do just that with a future battery cell factory for electric cars in Ontario.

Our colleagues at Electrek compiled a list of all the electric cars sold in the US and where they are assembled:

Source: electrek.co

Missing from this list are the Volkswagen ID.4, which is manufactured in Tennessee, and the Volkswagen ID. BUzz, which comes from Hanover, Germany.

Analysts have previously estimated that the tariffs could increase the prices of vehicles by up to 11,000 dollars. Shares of General Motors and Stellantis fell by 3 and 4 per cent, respectively, following the announcement. Ford shares gained slightly. The full scale of consequences remains to be seen.

The EU deeply regrets “the US decision to impose tariffs on European automotive exports,” says Ursula von der Leyen, President of the EU Commission. “As I have said before, tariffs are taxes – bad for businesses, worse for consumers equally in the US and the European Union.” She also promised that EU member states would “seek negotiated solutions,” all while working to “jointly protect our workers, businesses and consumers across our European Union.”

whitehouse.gov, euronews.com, bbc.com, europa.eu