US President Donald Trump has announced that he will impose tariffs of 25% on all cars not manufactured in the US.
According to Trump, the executive order is a step to grow the domestic auto industry while providing a powerful incentive for foreign automakers to move their production to the United States.
The tariffs, which are expected to take effect from April 3, target both fully assembled cars and key auto parts such as engines and transmissions, Reuters reports.
The president says there will be no tariff at all on vehicles made in the US. A move he believes will strengthen the domestic industry and create new jobs.
Donald Trump describes his decision as the beginning of “Liberation Day” in the United States, a signal that the country will no longer tolerate what he calls an unfair trade policy.
– We’re going to charge countries for doing business in our country and taking our jobs, taking our wealth, taking a lot of the things that they’ve been taking over the years, Trump said in the Oval Office on Wednesday.
– They’ve taken so much out of our country, friend and foe and frankly, friend has been oftentimes much worse than foe.
Donald Trump announced the introduction of 25% tariffs on all cars and vehicles not made in the US pic.twitter.com/MMnU4hMQqW
— Sprinter Observer (@SprinterObserve) March 27, 2025
Economic consequences and reactions
However, several analysts warn that the tariffs could have far-reaching consequences. Markets around the world have initially reacted negatively, with significant stock market declines for companies that rely on international supply chains, both major US automakers and foreign players.
According to White House estimates, the new tariffs could generate up to $100 billion in tax revenue per year, but at the same time risk driving up car prices by several thousand dollars per vehicle.
Outside the US, the EU in particular has expressed dissatisfaction with the decision. European Commission President Ursula von der Leyen has called the measure “bad for business, worse for consumers”, and warns that the tariffs will have negative effects on both European exporters and US consumers.