US President Donald Trump confirmed 25% tariffs on vehicles not manufactured in the US, set to take effect on 2 April. Auto shares fell across Asia following the news, with the impact expected to ripple through Europe.
US President Donald Trump signed a proclamation to impose 25% tariffs on auto imports. He has also said that the reciprocal tariffs on other countries would be less than expected. Both tariffs will take effect on 2 April.
“What we’re going to be doing is a 25% tariff on all cars that are not made in the United States,” he said at the White House on Wednesday.
He also told reporters that he would make the reciprocal levies “very lenient”, adding: “I think people are going to be very surprised. It’ll be, in many cases, less than the tariff that they’ve been charging us for decades.”
Additionally, Trump indicated that tariffs on lumber would come into effect on the same day.
According to the proclamation, the auto tariffs will not only apply to assembled vehicles but also to automobile parts. Vehicles qualified under the United States-Mexico-Canada Agreement (USMCA) will be assessed, and duties will apply only to the non-US-made content. Previously, Trump granted a one-month exemption on auto tariffs under the USMCA.
In 2024, Mexico was the largest automobile importer of the US, accounting for 16.2% of the market shares, followed by South Korea, Japan, and Canada, with shares of 8.6%, 8.2%, and 7.2%, respectively, according to GlobalData. Germany ranked fifth, with its auto imports to the US representing 2.7% of total sales.
The EU’s responses to Trump’s tariffs
European Commission President Ursula von der Leyen responded in a statement: “I deeply regret the US decision to impose tariffs on European automotive exports.” She also indicated that the European Union (EU) will “continue to seek negotiated solutions, while safeguarding its economic interests.”
The EU announced on 12 March that the bloc would impose tariffs on €26 billion worth of American goods “matching the economic scope the US tariffs” in April. This followed Trump’s earlier decision to impose 25% tariffs on steel and aluminum imports from other countries. The commission will resume countermeasures from 2018 to 2020 during Trump’s first term against €8 billion worth of US goods on 1 April, followed by a new package of tariffs on €18 billion in mid-April.
On Tuesday, the commission reduced the liberalisation rate for steel imports from 1% to 0.1%, thereby “limiting the amount of steel that can be imported into the EU tariff-free.” It also stated: “Countries will no longer be able to use the entire volumes of unused quotas of other countries.” The decision was made as“ the EU steel industry faces intense pressure from global overcapacity, rising exports from China, and increasing trade barriers in key markets like the US,” said the commission.
Auto stocks fall
Auto shares across Asia declined sharply following the news, with Japanese brands, including Toyota, Honda, Nissan, Mazda Motor, and Mitsubishi Motor, all falling between 3% and 6% in the early session. Shares of South Korea’s Hyundai declined 4% and Kia slumped 3.6% at 4:33 am CET. However, Chinese carmakers were largely unaffected, as China is not a major auto exporter to the US, accounting for just 0.6% of the market share in 2024.
Both European and US markets were closed before the announcement, but auto stocks were already under pressure following Trump’s comments earlier on Wednesday. German automakers are expected to be among the hardest hit. Shares of Mercedes-Benz, Volkswagen, and Porsche AG declined 2.1%, 1.6%, and 2.7%, respectively, in the previous session. The impact is likely to extend into today’s trading.
US automakers are also expected to face challenges from Trump’s tariffs, as many operate manufacturing facilities outside the country, particularly in Mexico and Canada.
The euro rebounds against the dollar
The euro rebounded against the US dollar during Thursday’s Asian session as Trump’s tariff announcement weakened the greenback. The EUR/USD pair rose 0.33% to 1.0775 at 4:45 am CET, recovering most of its losses from the previous session. However, the common currency remained at a three-week low against the dollar after falling for six consecutive trading days by Wednesday.