On Wednesday, President Trump announced that he will impose a 25% tariff on automobiles imported into the U.S., further intensifying his administration’s aggressive trade tactics to support domestic manufacturers.
Following an announcement by White House press secretary Karoline Leavitt that Mr. Trump would detail the tariffs at 4 p.m. EST, Wall Street reacted negatively, with the S&P 500 dropping 1.2% in afternoon trading. Experts warn that tariffs, which act as taxes on imports and are primarily passed on to American consumers, could lead households to reduce spending, consequently hindering economic growth.
Mr. Trump asserted during a press conference on Wednesday afternoon, “This will continue to drive growth like never before. We will essentially impose a 25% tariff. However, there will be no tariff if you manufacture your car in the United States.”
This latest round of tariffs follows a one-month exemption granted by Mr. Trump earlier this month to U.S. automakers from a series of import duties that took effect on March 4.
Shares of the major U.S. automakers — Ford, General Motors, and Stellantis — all saw declines after the new tariff announcement.
Mr. Trump has consistently maintained that tariffs on auto imports would be a signature policy of his presidency, believing that the additional costs imposed by these taxes would incentivize both American and foreign manufacturers to shift production to the U.S.
Despite having U.S. plants, automakers still rely on parts and finished vehicles from Canada, Mexico, and other countries. Experts predict that establishing additional manufacturing facilities will take time, likely resulting in higher domestic auto prices and a drop in car sales in the medium term.
According to a report from Anderson Economic Group, a Michigan-based economic consultancy, one analysis of Mr. Trump’s tariffs suggests that auto prices could rise by as much as $12,200 for certain models as a result of the new import duties.
