U.S. President Donald Trump has announced steep tariffs on imported cars and auto parts, a move that has triggered immediate backlash from global trading partners and financial markets.
The 25% tariff, which takes effect at 12:01 am (0401 GMT) on April 3, will apply to foreign-made cars and light trucks, with additional duties on key auto parts set to follow within the month.
The announcement rattled Wall Street, with General Motors and Stellantis shares falling over three percent ahead of Trump’s statement.
Meanwhile, in Japan, Toyota’s stock dropped by more than three percent, while Nissan, Honda, and Mitsubishi also suffered losses.
South Korea’s Hyundai saw a 2.7% decline in Seoul.
Japan’s Prime Minister Shigeru Ishiba called the move “extremely regrettable” and hinted at potential countermeasures. Canadian Prime Minister Mark Carney described the tariffs as a “direct attack” on Canadian workers and announced that his cabinet would meet to discuss retaliation. Brazil’s President Luiz Inácio Lula da Silva also signaled that his government “cannot stand still” in response.
Even Tesla CEO Elon Musk, a known Trump ally, voiced concerns about the tariffs’ economic impact, stating, “To be clear, this will affect the price of parts in Tesla cars that come from other countries. The cost impact is not trivial.”
Speaking from the Oval Office, Trump defended the move, saying, “What we’re going to be doing is a 25% tariff on all cars that are not made in the United States.”
His senior trade adviser, Peter Navarro, justified the decision, criticizing Germany and Japan for allegedly reserving high-value manufacturing for their own countries while turning the U.S. into a low-wage assembly operation.
Since his second term began in January 2025, Trump has already slapped new tariffs on Canada, Mexico, and China, along with a 25% duty on steel and aluminum imports.
However, the White House clarified that vehicles imported under the U.S.-Mexico-Canada Agreement (USMCA) may qualify for lower tariffs depending on their American content, while USMCA-compliant auto parts will remain duty-free for now.
Analysts warn that the tariffs could strain relations with major U.S. trading partners, including Japan, South Korea, Canada, Mexico, and Germany.
“Imposing 25% tariffs on imported cars will have a devastating impact on many of our close trading partners,” said Wendy Cutler, vice president of the Asia Society Policy Institute and a former U.S. trade negotiator.
She also warned that the move calls into question the value of U.S. trade agreements, given that many affected countries have free trade deals with Washington.
The American Automotive Policy Council, which represents Ford, General Motors, and Stellantis, issued a carefully worded response, supporting efforts to boost U.S. auto production but cautioning that “it is critical that tariffs are implemented in a way that avoids raising prices for consumers.”
According to the Center for Automotive Research, Trump’s tariffs on metals and auto imports could increase car prices by thousands of dollars and harm job growth in the industry.
Beyond automobiles, Trump is considering sector-specific tariffs on pharmaceuticals, semiconductors, and lumber.
His latest announcement comes just ahead of his planned “Liberation Day” on April 2, during which he promises reciprocal levies tailored to specific trading partners in response to what he deems unfair trade practices.
Trump has invoked emergency economic powers for some recent tariffs, but his auto levies are based on a 2019 government investigation that found excessive imports were weakening the U.S. economy and potentially harming national security.
