President Donald Trump of the United States has declared a 25 percent tariff on imported automobiles and their parts, marking a significant escalation in the ongoing trade war that has heightened tensions with both partners and allies.
During his address at the White House on Wednesday, Trump stated that the tariffs are intended to “recoup” funds from foreign nations that have been “taking our jobs” and “draining our wealth.”
“They’ve extracted so much from our country – both friends and foes. And, frankly, sometimes friends have been much worse than foes,” Trump remarked from the Oval Office.
“This is quite modest.”
Describing the initiative as “exciting,” Trump, who has promised to bolster US manufacturing, conveyed that the tariffs would “ignite growth like you’ve never seen before.”
The White House released a fact sheet indicating that the tariffs, set to go into effect on April 2, would “protect and enhance” the US auto sector, asserting that it had been “compromised by excessive imports threatening America’s domestic industrial base and supply chains.”
“Foreign automobile sectors, supported by unfair subsidies and assertive industrial policies, have grown, while US production has stagnated,” stated the White House.
According to the White House, importers delivering vehicles and components under the United States-Mexico-Canada Agreement will have the option to certify the percentage of their products that are US-made, thereby only incurring tariffs on “non-US content.”
The announcement of Trump’s tariffs received immediate backlash and concern from major trading allies, including the European Union, Canada, and Japan.
Ursula von der Leyen, President of the European Commission, warned that the tariffs would be “detrimental for businesses” and “even worse for consumers.”
“The EU will persist in pursuing negotiated solutions while protecting its economic interests,” von der Leyen commented in a post on X.
Canadian Prime Minister Mark Carney characterized the move as a “direct attack” on Canadian workers.
“We will stand up for our workers. We will stand up for our businesses. We will stand up for our nation – and we will do so together,” he asserted.
Japanese Prime Minister Shigeru Ishiba indicated that his government would contemplate “suitable measures” in response to the tariffs.
“Naturally, we will examine all options,” Ishiba stated in remarks to the parliament. “Ultimately, we must determine what will best serve Japan’s national interests.”
Trump’s decision is likely to cause substantial disruption within the global automotive industry, especially in the North American region, where automakers in the US, Mexico, and Canada have established highly integrated supply chains over decades of tariff-free commerce.
Daniel Ives, head of technology research at Wedbush Securities in Los Angeles, remarked that the tariffs would present a “hurricane-like headwind” for the sector if implemented as proposed.
“We maintain that this may be a form of negotiation and that these tariffs could fluctuate weekly, although this initial 25 percent tariff on autos from outside the US presents an almost untenable dilemma for US consumers,” Ives told Al Jazeera.
“We anticipate more information in the forthcoming week, but for now, investors will likely be disillusioned by this announcement that lacks clarity… as this tariff announcement/25 percent figure is difficult to digest.”
The American Automotive Policy Council (AAPC), representing US automakers Ford, General Motors, and Stellantis, expressed its commitment to increasing domestic production and collaborating with the administration on “sustainable policies” beneficial to Americans.
“Notably, it is vital that tariffs are applied in such a way as to avoid raising prices for consumers and to maintain the competitiveness of the integrated North American automotive sector, a significant achievement of the President’s USMCA agreement,” stated AAPC President Matt Blunt.
In 2024, the US imported $214 billion worth of passenger vehicles, according to the US Department of Commerce.
Key auto exporters to the US include many of Washington’s closest allies, such as Mexico, Canada, South Korea, Japan, and Germany.
Following Trump’s announcement, shares of Japanese and South Korean automakers plummeted, paralleling earlier drops in US auto stocks.
As of 01:45 GMT, Japan’s Toyota, Honda, and Nissan were down between 1.86 percent and 3.35 percent, while South Korea’s Kia had decreased by 2.27 percent.
The tariffs are also anticipated to result in higher vehicle prices for US consumers, of whom roughly half purchase cars from international sources.
“The tariffs imposed today will increase the costs associated with producing and selling vehicles in the United States, ultimately leading to higher prices, fewer choices for consumers, and reduced manufacturing jobs within the US,” Jennifer Safavian, president and CEO of Autos Drive America, stated in response to Trump’s announcement.
Trump’s most recent tariff declaration comes just days before he is scheduled to unveil additional “reciprocal” tariffs aimed at countries perceived to be taking advantage of the US in trade.
On Wednesday, Trump downplayed the upcoming tariffs’ severity, remarking that the measures would be “very lenient” and that people would be “taken aback.”
“In many cases, it’ll be less than the tariffs they have imposed on us for decades,” he concluded.
