Trump hits imported cars with 25% tariff to boost US jobs

Trump announced from the Oval Office that a 25% tariff would be implemented, clarifying that vehicles manufactured within the United States would be exempt. He formalized the decision by signing an executive order.

The tariffs are set to take effect on April 2nd, alongside "reciprocal tariffs," which theoretically aim to align tariff rates with those of other countries. Trump referred to this day as "America's liberation day."

Trump believes this decision will encourage foreign companies to increase car production in the U.S., with some companies relocating their factories here.

According to Trump, tariffs are expected to generate $100 billion in revenue. They will be added to the existing tariffs. Trump declared that these tariffs are "permanent" and that no exemptions will exist.

The executive order's text has not been published yet. According to a White House deputy spokesperson quoted by Reuters, auto parts covered by the USMCA agreement with Canada and Mexico are expected to be excluded from the tariffs for now. However, a photo of the document signed by Trump suggests that certain car parts, such as engines and engine parts, electronic components, steering system parts, and gearboxes, will be subject to the tariffs.

The President also announced plans to impose additional tariffs on the import of pharmaceuticals and timber soon.

He criticized the European Union's trade practices, claiming that selling American cars in Europe is "almost impossible," and accused the EU of politically motivated antitrust actions against American digital giants.

Trump commented that it functions in a similar way to a tariff.

He also expressed understanding of the opinion revealed in a recent group chat on Signal by U.S. Vice President J.D. Vance, who opposed striking the Houthis in Yemen, arguing that reopening the trade route through the Red Sea would primarily benefit Europe.

According to Tradeimex data, Mexico is the largest exporter of cars to the U.S., accounting for nearly 25% of the imported vehicles. Like Canada (13%), Mexico hosts factories of American car manufacturers. Following them are Japan (18.6%) and South Korea (17.3%). The largest European exporters are Germany, the United Kingdom, Slovakia, Italy, and Sweden.

At the beginning of March, Trump decided to delay implementing tariffs on cars and parts from Mexico and Canada at the request of American car manufacturers. These manufacturers warned that tariffs would significantly increase production costs—because parts cross the border multiple times during production—as well as consumer prices. Economists predicted that tariffs on Canada and Mexico alone could raise car prices by as much as $12,000.

According to CBS, about half of the cars in the U.S. are imported.