The US will impose a 25 percent fee on external vehicles imports, Donald Trump said on Wednesday after announcing a significant escalation in his commercial struggle with America’s allies.
Tariffs will come into force on April 2, the US president’s self-imposed deadline for detecting numerous mutual tariffs against US trading partners.
“This is the beginning of the day of ERITION Liberation in America,” Trump said at Oval office on Wednesday evening. “If you build your car in the United States there will be no tariffs,” he added.
Asked if there was anything that car manufacturers could do to remove fees, Trump replied, “This is permanent, 100 percent.”
The President offered a return to the vehicle industry earlier this month, when he temporarily excluded from the new tariffs all goods that agreed to trade conditions in 2020 of the United States-Mexico-Kanada Agreement.
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Trump did not describe any such exception. “For the most part, I think will lead cars that will be made in one place,” he said.
A US official later confirmed that tariffs would be applied to parts of the vehicle as well as to the finished cars. A White House Fact Sheet said the parts undergoing tariffs would be engines, transmissions, parts of the energy train and electrical ingredients.
The official added that 25 percent would be implemented except any other fee.
Cars that were in accordance with the Terms of the USMCA trade and enter the US would only face a fee in their foreign parts, one US official said.
“For example, if a car from Mexico enters 50 percent US portions and 50 percent foreign parts, the tariff will be 50 percent of 25 percent which is 12 and (a) half the percentage,” the official said.
Parts of vehicles entering the USA under USMCA will temporarily be exempt from tariffs, but will face 25 percent of taxes in their non-eg content after the US conducts a process to calculate them, according to the fact sheet.
“The income we will use to give the largest tax cut in American history,” said one US official. “Equal tax cut fees.”
The White House called for a 1962 national security law to implement tariffs, arguing that the country’s vehicle industry was “vital” for national security and “it has been mined by redundant imports that threaten the American industrial base and supply chains”.
Ursula von der Leyen, president of the European Commission, said Block repented of the decision.
“We will now appreciate this notice, along with other measures the US is foreseen in the coming days,” she said. “The EU will continue to seek negotiated solutions while maintaining its economic interests.”
Von der Leyen added: “As a great trading power and a strong community of 27 member states, we will jointly protect our workers, businesses and consumers throughout our European Union.”
The union of auto workers welcomed the fees. “The end of the race in the end of the vehicle industry begins with the regulation of our broken trade agreements, and the Trump administration has made history with today’s actions,” said Shawn Fain, President of UAW.
Car manufacturers have lobbied a lot against tariffs, arguing that they would increase their supply chains and increase the cost of cars for American drivers.
General Motors shares sloped 7 percent in the trading Wednesday, while shares ranked in the US in Chrysler Stellantis parent dropped by 4 percent, according to Factset data. Ford slipped about 5 percent.
Almost half of the vehicles sold in the US are imported and the vehicles collected in the US contain nearly 60 percent of foreign sources, according to Bernstein Daniel Roeska analyst.
“A 25 percent (fee) in automotive imports lasting beyond four to six weeks are likely to have a cold effect throughout the sector after OEM (original equipment manufacturers) must be accumulated with significant impact after all,” he said.
Jessica Caldwell, Head of Insights at the Edmunds Automotive Research Company, said vehicle prices are likely to rise while car manufacturers exceed their increased costs for consumers.
“With the tariff set at 25 percent visible, it is reasonable to expect the prices of the vehicle to rise, which presents an increased challenge for an industry that is already dealing with continued affordability concerns,” she said.
The largest source of vehicle imports in the US is Mexico, which sent 2.77MM beyond the border in 2024-With overwhelming majority under USMCA. Mexico Minister of Economy Marcelo Ebrard was in Washington on Wednesday to meet with Secretary of Trade Howard Lutnick.
Vehicle tariffs can be a devastating blow to Mexico’s economy, where about 1 million people are directly employed in a sector that accounts for about 4 percent of GDP.
Canadian vehicle manufacturers also criticized the action. “China could only dream of damaging the American vehicle industry so quickly and so firmly as the US president is threatening to do here again,” said Flavio Volpe, president of the Canadian Vehicle Manufacturers Association.
Canadian Prime Minister Mark Carney said his government will use revenue collected from vengeful fees to fund and protect employees and vulnerable companies.
“This is a direct attack on the workers I stood before this morning, on the ambassador’s bridge (connecting Canada and the US), a bridge that is the symbol and a reality so far, from the close ties of our two countries,” Carney reporters told Wednesday evening.
Trump’s announcement was the last in a series of fees he has ended since his return to office in January, including an additional 20 percent tax on all goods from China, and 25 percent in all steel and aluminum imports to the US
Earlier this week, Trump said the US would apply 25 percent tariffs for all goods imported in the US from countries that bought oil and gas Venezuela, also starting April 2. These fees are likely to hit China, India, Spain and Italy, among other things.
“Basically, I see it as tax reduction and also reduction of debt,” Trump told his fees. “And within a very short period of time, I think we will have a balance that will be extraordinary.”
Additional reporting by Andy Bounds, Ilya Gridneff and Christine Murray
