By Nandita Bose, David Lawder, and David Shepardson
WASHINGTON (SmartLink.biz.id) – U.S. President Donald Trump announced on Wednesday a 25% tariff on imported cars and light trucks beginning the following week, expanding the international trade dispute he initiated after returning to the presidency earlier this year. Automotive sector analysts anticipate that this action could lead to increased costs for consumers and hinder manufacturing processes.
"At the event in the Oval Office, Trump announced that they would be implementing a 25% tariff on all vehicles not manufactured within the United States," he stated.
Trump views tariffs as a means to generate additional income to compensate for the planned tax reductions and to rejuvenate America’s dwindling manufacturing sector. He announced that these new import duties will be implemented starting April 2nd, coinciding with his intention to impose retaliatory tariffs targeting nations primarily accountable for the significant U.S. trade imbalance. The collection of these new automobile-related tariffs is set to commence on April 3rd.
The declaration prompted immediate criticism from both the European Union and Canadian Prime Minister Mark Carney, who characterized it as a “direct assault” on those employed in Canada. “We shall safeguard our workforce, protect our enterprises, uphold our nation’s interests, and do so collectively,” stated Carney. Following this statement, shares of automotive manufacturers declined during extended hours of trade, whereas U.S. stock market indices suggested an anticipated drop when markets opened on Thursday.
The specifics of the proclamation that Trump signed were yet to be fully disclosed, however, its legal foundation stemmed from a 2019 national security probe into automobile imports initiated during Trump’s initial term. This information comes from an image of the endorsed document reviewed by SmartLink.biz.id.
The announcement cites Section 232 of the Trade Act from 1962. The inquiry conducted in 2019 concluded that automobile imports undermine U.S. national security; however, President Trump chose not to act on imposing tariffs at that juncture.
The directive currently excludes automobile components that meet the requirements of the United States-Mexico-Canada Agreement on trade, which was negotiated by Trump during his initial term. This accord facilitates mostly tariff-free commerce among the U.S. and its top two trading allies.
"Automobile components compliant with USMCA rules will stay free from tariffs until the Secretary of Commerce, working alongside U.S. Customs and Border Protection (CBP), sets up a procedure for applying duties to parts sourced outside the United States," stated White House principal deputy press secretary Harrison Fields on X.
In 2024, the United States imported $474 billion worth of automotive goods, with passenger vehicles accounting for $220 billion of this total. The primary sources of these imports were Mexico, Japan, South Korea, Canada, and Germany—nations that maintain strong alliances with the U.S.
STOCKS FALL
Prior to Trump's statement, stocks of American-listed car manufacturers dropped due to worries that tariffs might create significant turbulence within an international automobile sector which is already struggling because of the unpredictability stemming from Trump's swift imposition of tariff threats along with his sporadic changes in policy.
The American stock market finished lower due to concerns about tariffs, which have been troubling investors throughout most of the past month. Before the press conference, the key S&P 500 Index dropped by 1.1%, marking more than a 4% decline this March, making it its poorest monthly showing in almost twelve months.
The equity index futures for the S&P 500 dropped an additional 0.4% on Wednesday night following the announcement, indicating a softer opening for trading on Thursday.
Since assuming power on January 20, President Trump has imposed and then postponed tariffs on both Canada and Mexico over allegations about these countries' involvement in facilitating the entry of opioids like fentanyl into the United States. He also introduced high import taxes on products coming from China based on similar concerns. Additionally, substantial duties have been levied on imported steel and aluminum. Throughout this period, Trump has frequently mentioned his intention to declare worldwide retaliatory tariffs by April 2.
Concerning the upcoming announcement scheduled for April 2, Trump suggested that the proposed actions might not align with the reciprocal tariffs he has consistently pledged to implement.
We’re planning to make it quite relaxed," Trump stated. "I believe people will be really astonished. In numerous instances, it’ll be lower than the tariffs they’ve been imposing for decades.
The new vehicle levies were expected to drive costs of cars higher for consumers by thousands of dollars, hitting new vehicle sales and resulting in job losses, since the U.S. automotive industry relies heavily on imported parts, according to the Center for Automotive Research.
"At a moment when affordability remains top priority for Canadian vehicle purchasers, domestic auto manufacturers are striving to offer an array of budget-friendly models,” stated Jennifer Safavian, who serves as both president and CEO of Autos Drive America, a coalition advocating for international automotive companies. “However, the duties introduced recently will increase production and sales costs within the country, which could result in elevated prices, reduced choices for customers, and diminished employment opportunities in automobile assembly across Canada.”
(Reported by Nandita Bose, Doina Chiacu, David Lawder, Andrea Shalal, and David Shepardson from Washington; Extra reporting provided by Kalea Hall in Detroit and David Ljunggren in Ottawa; Written by Dan Burns; Edited by Alistair Bell and Matthew Lewis)