Trump Imposes 25% Tariffs on Foreign Cars Ahead of Liberation Day, GM Tumbles
1min read President Trump announced Wednesday that the U.S. will impose a 25% tariff on all cars not made in the United States, reinforcing his push for domestic manufacturing. He emphasized that vehicles built within the country would face absolutely no tariff.
The new levies were formalized in a presidential proclamation signed in the Oval Office and will take effect on April 2, with tariff collection beginning April 3. The announcement comes just ahead of Trump's planned unveiling of reciprocal tariffs, targeting countries he claims are responsible for the bulk of the U.S. trade deficit.
White House aide Will Scharf estimated that the tariffs would generate over $100 billion in new annual revenue for the U.S. economy. However, the specifics of the measure remain unclear, as modern vehicles are assembled from thousands of components sourced from multiple countries. Trump acknowledged this complexity, stating there would be very strong policing to determine which auto parts would be subject to tariffs.
The announcement sent shockwaves through the auto sector. Shares of gm sank over 6%, while toyota dropped more than 2%. In contrast, ford gained over 1%, possibly benefiting from its stronger U.S. production footprint.
In 2024, the U.S. imported $474 billion worth of automotive products, with passenger car imports alone totaling $220 billion. The largest suppliers were Mexico, Japan, South Korea, Canada, and Germany—all key U.S. allies now facing significant trade disruptions.
The European Union was quick to respond. European Commission President Ursula von der Leyen criticized the tariffs, warning that while the EU would pursue a negotiated resolution, it would also safeguard its economic interests.
German Economy Minister Robert Habeck took a tougher stance, calling for a firm response from the EU. We will not take this lying down, he stated, emphasizing the need for a strong countermeasure against the U.S. tariffs.
Canada's Prime Minister Mark Carney condemned the move as a "direct attack" and signaled potential retaliatory actions. Speaking to reporters in Ottawa, he vowed to "defend our workers, our companies, and our country."
Meanwhile, Britain is scrambling to secure an exemption. Finance Minister Rachel Reeves revealed that the U.K. is engaged in intense negotiations with Washington. She also hinted at reassessing government subsidies given to tesla, owned by Trump ally Elon Musk, as a countermeasure. Canada has already frozen rebate payments to Tesla in response.
