The tariffs come as experts warn that this could in fact affect the US automotive industry, as even US automakers source their components from around the world, meaning that they could face higher costs and lower sales.
US President Donald Trump on Wednesday said he was placing 25% tariffs on auto imports, a move that the White House claims would foster domestic manufacturing but could also put a financial squeeze on automakers that depend on global supply chains.
“This is permanent,” Trump announced, underscoring his seriousness about the tariffs directive. He added that the vehicle tariffs would begin to be collected on 3 April.
The tariffs come as observers and experts warn that this could in fact affect the US automotive industry, as even US automakers source their components from around the world, meaning that they could face higher costs and lower sales.
Some of the projections estimate that the likely average price of an imported car might increase by $12,500 if the taxes are fully passed on to the buyer, which could contribute to general inflation.
In the first reaction to Trump’s announcement, General Motors shares plunged roughly 3% on Wednesday afternoon while shares in Stellantis, the owner of Jeep and Chrysler, dropped nearly 4%. Ford’s stock was up slightly.
Von der Leyen reacts
In Brussels, European Commission President Ursula von der Leyen expressed regret at the U.S. decision to target auto exports from Europe and vowed that the bloc would protect consumers and businesses.
“Tariffs are taxes — bad for businesses, worse for consumers equally in the U.S. and the European Union,” she said in a statement, adding that the EU’s executive branch would assess the impact of the move, as well as other US tariffs planned for the coming days.
Trump has long declared that he would impose tariffs on auto imports as a hallmark of his presidency, hoping that as the price of the taxes increased, more manufacturing would move to the US and the budget deficit would be reduced.
However, American and international automakers already have plants all around the world to meet demand from customers across the world while keeping prices competitive.
There are concerns that it may take years for businesses to plan, construct, and launch the additional factories that Trump is proposing.
Canada calls Trump’s auto tariffs ‘direct attack.’
Meanwhile, Canadian Prime Minister Mark Carney says he needs to see the details of Trump’s executive order before taking retaliatory measures.
He called it unjustified and said he will leave the election campaign to go to Ottawa on Thursday to chair his special Cabinet committee on US relations.
Earlier, Carney announced a CA$2 billion ($1.4 billion) “strategic response fund” that will protect Canadian auto jobs affected by Trump’s tariffs.
Autos are Canada’s second-largest export, and Carney noted it employs 125,000 Canadians directly and almost another 500,000 in related industries.
Carney says it is appropriate that he and Trump speak on the phone. The two have not spoken since Carney was sworn in on 14, March.
