Washington, D.C.: US President Donald Trump on Wednesday announced a 25% tariff on auto imports, a move expected to heighten tensions with key trading allies. The tariff, which takes effect on April 2, has been dubbed by Trump as "Liberation Day" for the United States.
"What we’re going to be doing is a 25 percent tariff on all cars that are not made in the United States. If they’re made in the United States, it is absolutely no tariff," Trump declared at the White House.
The new policy is expected to impact foreign-manufactured cars and light trucks, adding to existing tariffs on imported goods. Since returning to office in January, Trump has already imposed tariffs on imports from major trading partners, including Canada, Mexico, and China, as well as a 25% duty on steel and aluminum.
While some automakers were temporarily exempted from tariffs on North American vehicles, the White House confirmed in a statement that the new 25% duty will apply to a wide range of imported passenger vehicles, including sedans, SUVs, crossovers, minivans, cargo vans, and light trucks. Essential automobile components such as engines, transmissions, powertrain parts, and electrical components will also be affected, with the possibility of additional tariffs on other parts in the future.
The administration argues that these measures are intended to generate government revenue, boost American industries, and bring trading partners in line with US economic interests. However, the move could strain relations with close allies such as Japan, South Korea, Canada, Mexico, and Germany.
Canada Responds to Trump’s Tariffs
Canadian Prime Minister Mark Carney swiftly reacted to Trump’s announcement, vowing to implement retaliatory measures against the US. "This is a direct attack," Carney said, announcing that he would convene a cabinet meeting on Thursday to formulate Canada’s response.
"We will defend our workers, we will defend our companies, we will defend our country, and we will defend it together," he affirmed.
Canada has already prepared a C$155 billion package of retaliatory tariffs, set to be implemented in stages in response to US trade actions.
Impact on the Auto Industry
Approximately half of the cars sold in the United States are manufactured domestically. Among imports, nearly 50% originate from Mexico and Canada, while Japan, South Korea, and Germany remain significant suppliers. Analysts warn that these tariffs could disrupt supply chains and drive up vehicle prices.
A report from the Center for Automotive Research previously estimated that tariffs on metals and imported cars could lead to price hikes of several thousand dollars per vehicle and negatively impact the job market in the auto sector.
Beyond automobiles, Trump’s trade policies extend to other industries. On Wednesday, he reiterated his intent to impose tariffs on lumber and pharmaceuticals, adding to sector-specific duties already levied on semiconductors and other key imports.
The announcement marks another step in Trump’s broader economic strategy, but its long-term effects on international trade and the US economy remain to be seen.
(With AFP inputs)
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