On Wednesday, President Donald Trump announced a 25% tariff on imported automobiles and light trucks, aiming to strengthen domestic manufacturing. Speaking from the Oval Office, Trump emphasized the economic benefits of the move, stating, “This will continue to spur growth like you haven’t seen before. If you build your car in the United States, there is no tariff.”
The tariffs are set to take effect on April 2, with the U.S. beginning duty collection the following day. Trump estimated the policy could generate between $600 billion and $1 trillion in revenue over two years, which he said would be used to reduce national debt. However, White House staff secretary Will Scharf offered a more conservative projection of $100 billion in additional revenue.
The announcement follows a one-month exemption granted earlier this month to U.S. automakers from previously imposed import duties. Despite Trump’s assurances of economic growth, experts caution that tariffs, which act as taxes on imports, could raise consumer costs, reduce spending, and slow economic growth.
Auto Stocks React
Shares of major U.S. automakers Ford, General Motors, and Stellantis fell after the announcement. Tesla, already struggling with declining sales and controversy surrounding CEO Elon Musk’s ties to the administration, saw its stock drop nearly 6% on the day, adding to its 33% decline for the year.
Potential Impact on Price
Trump has long championed auto tariffs, arguing they would push automakers to relocate production to the U.S. However, most manufacturers rely on Canada, Mexico, and other countries for parts and finished vehicles. As a result, experts predict short-term price hikes and potential sales declines.
A report by Anderson Economic Group estimates that auto prices could rise by up to $12,200 for some models due to the new import duties.
Currently, about 50% of cars sold in the U.S. are manufactured domestically, with imports largely coming from Mexico, Canada, Japan, South Korea, and Germany.
