The recently elected President Donald Trump has officially announced the imposition of 25% tariffs on all cars shipped to the US. This announcement has taken the global automobile industry by storm. The stocks of the three major car manufacturing companies witnessed a fall in their stocks after his announcement. The tariffs will take effect on the 3rd of April 2025 at 12:01 AM ET. If you are someone who wants to know more about the tariffs imposed, this article is for you. It brings you everything you need to know about Trump announcing 25% auto tariffs.
Trump Announces 25% Auto Tariffs: What Trump Said Before Signing The Executive Order?
For decades, automobile manufacturers considered Canada, Mexico, and the United States as one big country with absolutely no tariffs between them. This was because of a free trade agreement signed years ago. Trump, before signing the executive order on Wednesday, talked about how a friend is sometimes worse than a foe. He then announced that they were going to do a 25% tariff on all cars that are not made in the United States. Trump also informed that if the cars are made in the United States, there are absolutely no tariffs.
Car Parts Included In Auto Tariffs As Well
According to the proclamation from Trump, the 25% tariffs will not only include cars made in foreign lands but also car parts. This includes engines and transmission as well. The tariffs on car parts will come into effect no later than May 3. The parts that are coming from Mexico and Canada, complying with the United States-Mexico-Canada Agreement (USMCA) will be exempted. This is until US Customs and Border Protection has a system established to apply tariffs to non-US parts.
Stellantis, Ford, And General Motors Witness A Fall In Shares
President Trump also mentioned that he has been in contact with the big three automakers in the industry, namely Stellantis, Ford, and General Motors. He added that if these companies have factories in the US, they are thrilled. However, if they do not have factories in the US, they will simply have to start building them. Following Trump’s announcement, the stocks of all the auto giants witnessed a fall in after-hours trading. Shares of General Motors witnessed a 7% fall, while the other two companies witnessed a 4% fall in stock.
Trump Announces 25% Auto Tariffs: Reactions From Other Countries
The stocks of some major carmakers like Toyota and Honda also witnessed a fall in the Asian market. Toyota was trading 3.3% lower in Japan, while Honda and Nissan also lost around 2%. Shigeru Ishiba, Prime Minister of Japan, told the lawmakers that all the options will be considered. On the other hand, the South Korean government also held an emergency meeting with automakers to discuss the impact of the US auto tariffs. Ahn Duk-Geun, the trade minister of South Korea, stated that the US auto tariff imposition is going to pose significant challenges for their automobile companies. Mark Carney, the Canadian Prime Minister, called the auto tariffs a direct attack and a violation of the USMCA. He also added that Ottawa will examine its options for a response that can also include possible retaliatory tariffs.
Expected Rise In Car Prices
According to an analysis from a Michigan-based think tank, Anderson Economic Group, the vehicle production cost in US plants will rise between $3,500 to $12,000 each. A thing like an all-American car does not exist, and all the automakers depend on Canada as well as Mexico for car parts. According to an industry expert, another loss from the tariffs is the loss of product variety. The masses will have fewer options and variety to purchase from, and the rise in prices will also limit their reach.
