"President Trump said he would impose 25% tariffs on global automotive imports to the U.S., making good on a pledge to impose duties on cars and trucks from other nations.
"What we're going to be doing is a 25% tariff on all cars not made in the U.S.," Trump said Wednesday in the Oval Office, appearing to dispel any chance of an exemption for countries like Canada and Mexico, which have a free-trade agreement with the U.S.
The U.S. will start collecting the auto tariffs on April 3, Trump said, the day after he is set to announce a broader slate of trade actions. Trump's so-called reciprocal tariffs, slated for that day, were originally planned to equalize U.S. tariffs with those charged by foreign nations, but Trump said Wednesday that the tariffs he plans to implement would likely be lower than that.
Canadian Prime Minister Mark Carney called the tariffs a direct attack on Canadian workers. He said Canadian officials would decide what actions to take, including possible retaliatory tariffs, after seeing the language of Trump's executive order.
"It's clear that this is a violation and he has betrayed our trade agreement," said Carney, who has just begun an election campaign that will culminate in an April 28 vote.
The tariffs will cover finished automobiles and automotive parts, a senior administration official said. The administration had considered exempting auto parts from the tariffs. But parts that are compliant with the U.S.-Mexico-Canada Agreement will remain tariff-free until the Commerce Department "establishes a process to apply tariffs to their non-U.S. content," White House deputy press secretary Harrison Fields wrote online.
The 25% tariff will be added on top of existing duties, including a 2.5% tariff currently imposed by the U.S., as well as existing 25% tariffs on light trucks, known as the "chicken tax," the senior administration official said.
Nearly half of new passenger vehicles sold in the U.S. in 2024 were assembled outside the U.S., according to data from S&P Global Mobility. Mexico is the biggest auto exporter to the U.S., sending pickups from General Motors, Ram and Toyota as well as affordable sedans from Nissan and luxury models from BMW and Audi.
Popular mass-market vehicles such as Toyota's RAV4 and the Honda Civic are also imported from Canada for sale in the U.S.
GM stock slid 8% after hours on Wednesday, while Ford Motor was down 5% and shares in Jeep and Ram parent company Stellantis fell 5%. Tesla, which builds its domestically sold cars in the U.S., was up about 1%.
Trump's previously implemented, but largely delayed, tariffs of 25% on Canada and Mexico would add about $6,000 in costs to vehicles assembled in those countries assuming parts were also included in the levies, Cox Automotive said.
"Bottom line: lower production, tighter supply and higher prices are around the corner," the chief economist of Cox Automotive, Jonathan Smoke, said.
The American Automotive Policy Council, a trade group representing Ford, GM and Stellantis, said tariffs should be implemented without raising prices for consumers or hurting the competitiveness of North American automakers. A group representing foreign automakers with U.S. operations warned tariffs would make cars less affordable.
Trump's team has whipsawed between a maximalist approach to tariffs and offering potential leniency for companies and trading partners. The president originally said that he would impose sector-specific tariffs on industries such as semiconductors, lumber and pharmaceuticals on April 2. But he reiterated on Wednesday that those industry-specific tariffs wouldn't happen on that date, though they could be announced later.
Trump said his reciprocal tariffs would be "less than the tariff [trading partners] have been charging us for decades." Trump also said the reciprocal tariffs will target "all countries," and not just the 15% of nations Treasury Secretary Scott Bessent had said could be made a priority in the April 2 action.
The president, a Republican, reiterated a campaign pledge to juice auto demand, saying that he was working with House Speaker Mike Johnson (R., La.) to pass a measure that would allow consumers to deduct car interest payments from their income taxes for American-made cars.
United Auto Workers President Shawn Fain called the tariffs "a major step in the right direction for auto workers and blue-collar communities across the country." The UAW has said outsourcing to Mexico has decimated U.S. jobs since the original free-trade agreement was signed in 1994." [1]
American workers will have more good-paying jobs. And the rich who buy those cars will easily pay an extra $6,000. Everyone is happy.
1. President Sets 25% Tariffs on All Car Imports --- Latest policy swing, taking effect April 3, gives no exemption to Canada, Mexico. Bade, Gavin; Otis, Christopher. Wall Street Journal, Eastern edition; New York, N.Y.. 27 Mar 2025: A1.
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