President Donald Trump announced Wednesday that his administration will impose 25% tariff on all cars imported into the United States starting April 2.
The measure will impact finished cars and trucks from around the world, including American brands manufactured overseas.
Under the authority of Section 232 of the Trade Expansion Act of 1962, Trump’s move targets imports of passenger vehicles, trucks, and essential auto parts like engines and transmissions.
According to the president, the tariffs will not apply to American-made parts, promising “very strong policing” to ensure compliance. The measure is aimed at revitalizing domestic manufacturing and addressing the nation’s trade imbalance,
“If parts are made in America and a car isn’t, those parts are not going to be taxed or tariffed,” Trump said. “It’s one number, and that number is going to be used to reduce debt greatly in the United States and build things.”
Trump’s decision appears to be a shot across the bow for countries like Canada, whose automotive industry heavily depends on exports to the U.S.
“I will substantially increase, on April 2nd, the Tariffs on Cars coming into the U.S. which will, essentially, permanently shut down the automobile manufacturing business in Canada. Those cars can easily be made in the USA!” he tweeted earlier in March.
The tariff initiative comes as the American auto industry faces significant challenges. While the U.S. remains a major manufacturer of automobiles, foreign trade barriers and growing reliance on imports have contributed to a staggering $93.5 billion trade deficit in automobile parts last year.
Nearly half of the 16 million vehicles purchased annually in the U.S. are imported, and just 25% of their content is truly “Made in America.”
Advocates of the policy argue that the tariffs will spur companies to move manufacturing operations back to the United States, creating jobs and revitalizing struggling industrial communities.
The White House estimates the tariffs could generate $100 billion in annual revenue, though this number could decrease if Americans shift toward buying domestic vehicles or if foreign manufacturers relocate production to the U.S.
Critics, however, caution that higher prices for imported vehicles are likely. Even American automakers like Ford and General Motors could face complications, as they import substantial portions of their inventory from abroad.
The new tariffs mark a dramatic escalation in Trump’s broader push to encourage companies to “Build American, Buy American,” sending a clear message to foreign automakers: Bring your factories to the U.S. or pay the price.