U.S. President Donald Trump has announced a 25% tariff on imported cars and light trucks, set to take effect next week. The move, part of Trump’s broader trade policies, is expected to increase vehicle prices and disrupt production.
Trump justified the tariffs as a means to boost revenue and revive the U.S. industrial sector, stating that collections would begin on April 3. The decision has drawn strong criticism from international leaders. European Commission President Ursula von der Leyen called it “bad for businesses, worse for consumers,” while Canadian Prime Minister Mark Carney described it as a “direct attack” on Canadian workers.
The United Auto Workers (UAW) union, however, welcomed the decision, arguing that it could bring back American manufacturing jobs.
Financial markets reacted negatively, with automaker stocks falling and U.S. equity index futures sliding. The economic impact is expected to be significant, as the U.S. imported $474 billion worth of automotive products in 2024.
Trump’s move revives a 2019 national security investigation into auto imports but comes with temporary exemptions for auto parts. Components compliant with the U.S.-Mexico-Canada Agreement (USMCA) will remain tariff-free for now, but millions of vehicles from Canada and Mexico may soon face heavy duties.
Experts warn that the tariffs could violate USMCA and South Korea’s free trade agreement, potentially leading to trade disputes. Higher car prices, reduced sales, and job losses in the U.S. auto sector are also anticipated.
Trump is set to announce further global reciprocal tariffs on April 2, claiming they will be “lenient” compared to existing foreign tariffs on U.S. goods.
