US President Donald Trump escalated his trade offensive on Wednesday by announcing 25% tariffs on all imported passenger vehicles and light trucks.
The move is set to take effect on 3 April, sending shockwaves through the global automotive industry and drawing sharp rebukes from key US allies. The surprise announcement, made during an Oval Office appearance, marks the most aggressive trade measure of Trump’s current term and threatens to add thousands of dollars to vehicle prices while disrupting complex international supply chains.
What we’re going to be doing is a 25% tariff for all cars that are not made in the United States.
The tariffs will apply to $474 billion in annual automotive imports, disproportionately affecting major suppliers including Mexico, Japan, South Korea, Canada and Germany. In a partial concession to North American manufacturers, the White House temporarily exempted auto parts compliant with the USMCA trade agreement while leaving other components vulnerable to duties after 3 May.
Global backlash and market turmoil
International reaction was swift and critical. European Commission President Ursula von der Leyen denounced the tariffs as “economically destructive.” Meanwhile, Canadian Prime Minister Mark Carney characterised them as a betrayal of allied workers.
We will defend our workers, we will defend our companies, we will defend our country, and we will defend it together.
The announcement triggered immediate market turbulence, with automaker stocks tumbling in after-hours trading and the S&P 500 extending its March losses to 4%.
Domestic reception proved more mixed. The United Auto Workers union praised the move as long-overdue protection for American jobs, while industry groups warned of dire consequences.
Autos Drive America, representing foreign automakers, projected the tariffs would increase production costs, reduce consumer choice and ultimately cost US manufacturing jobs given the industry’s heavy reliance on imported components.
Industry observers note the tariffs arrive at a particularly vulnerable moment for automakers, who are already struggling with the costly transition to electric vehicles. The measures risk stalling vehicle sales, exacerbating inflationary pressures and potentially undermining Trump’s own economic promises.
