According to media reports, U.S. President Donald Trump has stated that he will announce new tariffs on imported cars to the United States around April 2. This is part of his broader efforts to reshape global trade relations and push businesses to move production to the U.S. Trump revealed this news on February 14 when signing an executive order on energy policy.
This move is the latest action in Trump's escalation of the trade war, fulfilling his campaign promise to impose broad tariffs on both U.S. allies and competitors. Trump stated that cars are one of the products he plans to impose additional tariffs on, while also announcing a plan to implement reciprocal tariffs with several trading partners to address what he considers unfair trade practices. He noted that these tariffs on specific products would be implemented at a later time, following the reciprocal tariffs.
Trump plans to implement reciprocal tariffs on countries that impose import taxes on U.S. products, potentially as early as April. These tariffs differ from his previous commitments on tariffs targeting the automotive industry. Trump has also threatened to impose tariffs on sectors such as energy, semiconductors, and pharmaceuticals. Earlier this week, he also announced a plan to impose a 25% tariff on steel and aluminum imports into the U.S.
The automotive industry will be directly affected by Trump's new tariffs, potentially dealing a major blow to car brands from countries such as Japan, Germany, and South Korea. Last year, imported cars accounted for about 50% of the U.S. automotive market. According to data from the U.S. Department of Commerce, the U.S. imported approximately 8 million new passenger cars and light trucks last year, valued at more than $240 billion. Market research firm GlobalData reports that 80% of vehicles sold by Volkswagen Group in the U.S. are imported, while 65% of vehicles sold by Hyundai-Kia are imported.
Currently, Trump has not provided specific details on the scope or rate of potential automotive tariffs. It is also unclear whether vehicles produced under the U.S.-Mexico-Canada Agreement (USMCA) will be exempt from industry-specific tariffs, given the highly integrated North American automotive production supply chain.
Mexico and Canada, the U.S.'s main trade partners, are also the leading sources of automotive imports to the U.S. Trump previously announced that he would suspend tariffs on Mexican and Canadian products and delay the implementation of those tariffs until March 4, 2025, in an effort to secure concessions from Mexico and Canada on border security issues. Trump has frequently used tariffs as a means to force other countries to make concessions on issues such as immigration and drugs, emphasizing that tariffs are one of the tools to persuade companies to relocate production to the U.S.
Ford CEO Jim Farley warned earlier this week that tariffs on Mexico and Canada would have a significant impact on the entire U.S. automotive industry. Industry trade groups have warned that U.S. tariffs will lead to higher prices and supply chain disruptions, but they indicated they will wait for the specific tariff details to be implemented by the Trump administration. The lobbying group Autos Drive America, which represents foreign automakers, has not yet commented, and the American Automotive Policy Council, which represents Detroit's Big Three automakers, did not immediately respond to requests for comment.
Following the report, shares of General Motors and Ford Motor Company remained largely unchanged. Both companies have significant manufacturing operations in North America.
