Trump Slaps 25% Tariff on Car Imports in Bold Move to Boost U.S. Auto Industry – Allies and Automakers Push Back
In a sweeping escalation of trade tensions, President Donald Trump has announced a new 25% tariff on imported cars and auto parts — a move aimed at revitalizing the American car industry but likely to trigger global backlash and economic disruption.
Set to take effect on April 2, the tariffs will apply to vehicles entering the U.S., with separate duties on imported car parts beginning in May or later. Trump claims the measures will deliver “tremendous growth” and spur domestic manufacturing and jobs. But experts warn the outcome may be far more complicated.
A High – Extractes Gamble
The U.S. imported about 8 million cars in the past year —worth around $240 billion—representing nearly half of all vehicle sales. With Mexico, South Korea, Japan, Canada, and Germany topping the list of suppliers, the tariffs threaten to upend long-established supply chains and provoke a fierce response from trade partners.
U.S. automakers may not be spared either. Many of them operating across North America under the long-standing free trade agreement between the U.S., Mexico, and Canada, relying on cross-border parts and labor. While the White House says imports from Canada and Mexico will be temporarily exempt while customs systems are adjusted, concerns remain.
Shockwaves in Markets and Manufacturing
The fallout was immediate. Shares of General Motors fell by 3% following the announcement, with Ford and other carmakers seeing similar drops as Wall Street activated to the uncertainty.
“This is permanent,” Trump declared at a press conference, brushing off any notion of reversal. “If you build your car in the United States, there is no tariff.”
But industry analysts say the move could backfire, drive up vehicle prices for consumers and forcing potentially shutdowns at U.S. production facilities. According to the Anderson Economic Group, the tariffs could increase the price of some vehicles by $4,000 to $10,000, depending on the model.
International Backlash Builds
World leaders responded. Japanese Prime Minister Shigeru Ishiba said Tokyo would consider “all options” in response. Japan, home to global car giants like Toyota and Honda, is the second-largest car exporter worldwide. Shares in Japanese vehicles fell sharply in early Tokyo trading.
Canadian Prime Minister Mark Carney called the announcement a “direct attack” on his nation’s car industry. “This will hurt us,” he said, “but we’ll emerge stronger through unity.”
In Europe, EU Commission President Ursula von der Leyen criticized the decision: “Tariffs are taxes—bad for businesses, worse for consumers.” She added the EU would “safeguard its economic interests” while continuing to seek a negotiated path forward.
The UK, facing possible tariff exposure, is in urgent talks with U.S. officials. British automaker Jaguar Land Rover sold over 116,000 vehicles in the U.S. last year —its largest market.
Industry Voices Sound Alarm
Mike Hawes, head of the UK’s Society of Motor Manufacturers and Traders (SMMT), warned the tariffs could be disastrous: “The UK and U.S. must come together immediately and strike a deal that works for all.”
Automakers are still doing gearing with steel and aluminum tariffs introduced earlier this month. Industry giants like Ford and GM had previously urged Trump to spare the auto sector from further duties.
A recent U.S. International Trade Commission report projected that a 25% import tariff could slash imports by nearly 75% while raising domestic vehicle prices by about 5%.
Tariffs as a tool of pressure
Despite mounting criticism, Trump doubled down, pointing to Hyundai’s announcement just a day earlier: a $21 billion investment in the U.S., including a new steel plant in Louisiana. “This is a clear demonstration that tariffs very strongly work,” Trump said.
Labor unions and trade groups offered mixed reactions. United Autoworkers president Shawn Fain, a vocal Trump critic, praised the move, say it’s a step toward “ending the free trade disaster” that has hollowed out working-class communities.
Matt Blunt, head of the American Automotive Policy Council, struck a supportive tone: “U.S., automakers are committed to President Trump’s vision of growing automotive production and jobs on American soil.”
