• Donald Trump announced a 25% tariff on foreign-made cars and parts, effective April 3.
• The tariffs aim to revitalise US manufacturing but risk straining ties with key trading partners.
• Uncertainty over the tariffs has roiled financial markets and raised concerns about economic impacts.

US President Donald Trump announced steep tariffs on auto imports and parts on Wednesday, in a move set to fuel tensions with trading partners before further promised levies next week.

“What we’re going to be doing is a 25% tariff on all cars that are not made in the United States,” he said as he signed the order in the Oval Office.

The move takes effect at 12.01am eastern time on April 3 and impacts foreign-made cars and light trucks. Key automobile parts will also be hit within the month.

Peter Navarro, Trump’s senior counsellor for trade and manufacturing, later in a briefing blasted “foreign trade cheaters” who he said turned America’s once-bustling manufacturing sector into a “lower wage assembly operation for foreign parts”.

“That threatens our national security because it’s eroded our defence and manufacturing industrial base,” he said.

He took aim at Germany and Japan for reserving the construction of higher-value parts to their countries.

Since returning to the presidency in January, Trump has imposed fresh tariffs on imports from major US trading partners Canada, Mexico and China – alongside a 25% duty on steel and aluminium.

The latest levies will be in addition to those already in place for products.

But the White House added that vehicles entering under the US-Mexico-Canada Agreement (USMCA) can qualify for a lower rate depending on their American content.

Similarly, USMCA-compliant auto parts will remain tariff-free as officials establish a process to target their non-US content.

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US President Donald Trump announced steep tariffs on auto imports and parts Wednesday, in a move set to fuel tensions with trading partners before further promised levies next week. Photo / Getty Images

‘Devastating impact’

Uncertainty over Trump’s trade plans and worries they could trigger a downturn have roiled financial markets, with consumer confidence also falling in recent months amid fears of the tariffs’ effects.

Wall Street slumped before Trump’s announcement, with shares in General Motors down 3.1% although Ford eked out a 0.1% gain.

The Trump administration has referred to levies as a way to raise Government revenue, revitalise American industry and press countries on US priorities.

But targeting imported cars could strain ties with countries like Japan, South Korea, Canada, Mexico and Germany – which are close US partners.

“Imposing 25% tariffs on imported cars will have a devastating impact on many of our close trading partners,” said Wendy Cutler, vice-president at the Asia Society Policy Institute and a former US trade negotiator.

She added that Washington has free trade agreements with some affected parties, “calling into question the value of US commitments” under a trade deal.

About 50% of cars sold in the United States are manufactured within the country. Among imports, about half come from Mexico and Canada, with Japan, South Korea and Germany, also major suppliers.

And of the US-made cars, more than half were assembled from foreign parts, said a White House official.

Canadian Prime Minister Mark Carney criticised Trump’s automobile import tariffs as a “direct attack” on his country’s workers.

The Centre for Automotive Research has previously estimated that US tariffs – including those on metals and imported autos – could increase the price of a car by thousands of dollars and weigh on the jobs market.

‘Liberation Day’

Besides the automobile industry, Trump is also eyeing sector-specific tariffs, such as on pharmaceuticals, semiconductors and lumber.

Wednesday’s announcement comes before April 2, which Trump has dubbed “Liberation Day” for the world’s biggest economy.

He has promised reciprocal levies on the date, tailored to different trading partners to remedy practices that Washington deemed unfair.

On Wednesday he said these duties will impact all countries but would be “very lenient”.

It is unclear if further sector-specific tariffs would be unveiled on April 2.

Hopes of a narrower tariff rollout gave financial markets a boost, but investors remain jittery over rapid policy changes.

While Trump has invoked emergency economic powers for some recent tariffs, his auto levies build on a Government investigation completed in 2019.

The probe found that excessive imports were weakening the internal economy and might impair national security.

Since then, a White House official said, national security concerns have “remained and may have escalated”.

-Agence France-Presse