President Trump announces new auto tariffs

President Donald Trump on Wednesday announced new tariffs on auto imports during a press conference at the White House.

The president said he will impose a 25% tariff on all imported autos, up from 2.5% previously. He indicated the auto tariffs will take effect on April 2, when his reciprocal tariff plans are also expected to be announced.

Trump, who views tariffs as a way to bring in tax revenue to finance his plans for tax cuts while spurring a revitalization of domestic manufacturing, previously suggested that he could impose auto tariffs that run “in the neighborhood of 25%.”

In his Oval Office remarks, Trump said the tariffs “will lead to the construction of a lot of plants, in this case auto plants, and you’re going to see numbers that you haven’t seen both in terms of employment. It take a little while, you’ll have great construction numbers initially, and then ultimately you’re going to have a lot of people making a lot of cars.”

Tariffs could increase the cost of cars for consumers by thousands of dollars, according to analyses by auto industry groups. Higher costs could cause automakers to curb production and potentially lead to job losses in the industry, the Center for Automotive Research said.

The U.S. imported $474 billion of automotive products last year, including passenger cars worth $220 billion. The biggest suppliers were Mexico, Japan, South Korea, Canada and Germany, all of which are close U.S. allies.

Cox Automotive said Wednesday that if there aren’t tariff carve-outs for the auto industry’s imports from Canada and Mexico, the cost of a U.S.-made vehicles would increase by about $3,000 – while autos made in Canada or Mexico would rise $6,000. 

It expects that by mid-April, there will be disruption to “virtually all” North American vehicle production, leading to about 20,000 fewer vehicles produced per day, or about a 30% hit to production.

“Over the longer term, we expect sales to fall, new and used prices to increase, and some models to be eliminated if those tariffs persist, and we’ve yet to hear details about tariffs on the European Union, Japan and South Korea,” Cox Chief Economist Jonathan Smoke said in a report by Reuters. “Bottom line, lower production, tighter supply, and higher prices are around the corner, reminiscent of 2021.”

This is a developing story. Please check back for updates.

Reuters contributed to this report.