Trump Imposes 25 Percent Tariff on Cars Imported from Abroad

      Stellantis

      In a decision that President Trump claims will result in "tremendous growth in the auto industry," the United States is set to impose a 25 percent tariff on imported vehicles starting April 2.

      Leading up to the President's announcement, auto industry analysts had forecasted that any significant tariff would cause the prices of new cars to increase by $3,000 to more than $10,000 per vehicle. Nevertheless, Trump asserts that consumers will actually see lower costs. He argues that he is working to reduce auto loan interest rates, “but only if the vehicle is produced in America.”

      When questioned about the possibility of lifting the tariffs, he affirmed that they are “100 percent” permanent. The President aims to eliminate the current automotive supply chain, which depends on parts from various countries for vehicle assembly. As we have discussed multiple times before, no new cars are manufactured entirely in the United States.

      We will soon find out how global automakers such as Toyota and Honda will react, as the U.S. is their biggest market. For context, of the 2.3 million vehicles sold by Toyota in the U.S. last year, about 1 million were produced abroad.

      It remains unclear what standards automakers need to meet for a vehicle to be classified as “built in the U.S.” Many manufacturers highlight that their vehicles are assembled domestically, but this doesn’t guarantee that the parts they utilize are sourced from within the country.

      This is an evolving situation.