President Donald Trump on Wednesday announced 25% tariffs on all cars shipped to the United States.
The tariffs, set to take effect April 3, are aimed at expanding America’s auto manufacturing prowess.
“Frankly, friend has been oftentimes much worse than foe. And what we’re going to be doing is a 25% tariff on all cars that are not made in the United States,” Trump told reporters on Wednesday before signing an executive proclamation in the Oval Office. “If they’re made in the United States, it’s absolutely no tariff.”
The new tariffs aren’t just on cars, but on car parts, as well, including engines and transmissions. The tariffs on car parts are set to take effect “no later than May 3,” according to the text of the proclamation Trump signed.
Parts coming from Canada and Mexico that comply with the United States-Mexico-Canada Agreement (USMCA) will be exempt from the tariffs until U.S. Customs and Border Protections has a system in place to apply tariffs to non-US parts, according to a fact sheet published by the White House on Wednesday.
Trump said he’s been in touch with the Big Three automakers — Stellantis, Ford and General Motors. “If they have factories here, they’re thrilled,” he said, according to a report from CNN. “If you don’t have factories here, they’re going to have to get going and build them.”
All three companies’ stocks fell in after-hours trading after Trump’s announcement, the network reported. Shares in General Motors (GM) plunged more than 7% after-hours, while Ford (F) and Stellantis (STLA), which produces Jeep, Ram, Chrysler and Dodge cars, both fell by more than 4%.
Shares in German automakers fell Thursday morning on the news. Stocks in Volkswagen were down 1.7%, and BMW down 1.8%, by 6.29 a.m. ET.
It was a similar picture in Asia. In Japan, shares in Toyota (TM), the world’s largest carmaker, ended Thursday about 2% lower, while Honda (HMC) lost 2.5%.
In Canada, Prime Minister Mark Carney called the tariffs a “direct attack” in violation of the USMCA, and said Ottawa will examine its options for a response — including possible retaliatory tariffs.
