US announces 25% tariff on imported cars, effective April 2
US President Trump signed an executive order on Wednesday imposing a 25% tariff on all cars manufactured outside the United States, effective April 2, with collection beginning April 3. The tariffs cover imported sedans, SUVs, crossovers, minivans, cargo vans, and light trucks, as well as some parts such as engines and transmissions. A White House fact sheet noted that parts compliant with the USMCA agreement will be temporarily exempted, but tariffs will apply by May 3 at the latest. Automakers and suppliers have expressed concerns, as Mexico and Canada account for the majority of US auto imports.
U.S. President Donald Trump signed an executive order on Wednesday imposing a 25% tariff on all cars manufactured outside the United States, effective April 2.
"The measure takes effect on April 2, and we begin collecting on April 3," Trump said at a White House press conference.
According to a White House fact sheet, the tariffs apply to imported sedans, SUVs, crossovers, minivans, cargo vans, and light trucks, as well as certain auto parts, including engines, transmissions, powertrain components, and electrical elements.
"If parts are made in America and the car is not, then those parts will not be taxed or tariffed, and we will regulate that very strictly," Trump said.
The White House fact sheet also noted that auto parts compliant with the U.S.-Mexico-Canada Agreement (USMCA) will be exempt from tariffs until the U.S. can establish a process to tariff only the non-U.S. content of those parts. However, the official proclamation stated that tariffs will apply to these parts no later than May 3.
"Importers of vehicles imported under the USMCA will have the opportunity to certify their U.S. content, and the system will ensure that the 25% tariff applies only to the value of their non-U.S. content," the fact sheet read.
Previously, Trump had paused tariffs on USMCA-compliant auto imports after communicating with General Motors, Ford, and Stellantis, as confirmed by White House Press Secretary Karoline Leavitt.
Before the pause, Trump had stated that the tariff rate, which would also cover semiconductors and pharmaceuticals, would be around 25% and would increase over the year.
Automakers and parts suppliers remain cautious about the potential impact of the tariffs on the U.S. auto industry, especially since Mexico and Canada account for the majority of U.S. auto imports.
According to the International Trade Administration, of the approximately 3.5 million vehicles produced in Mexico in 2023, an estimated 76% were exported to the U.S. That same year, according to the Canadian Vehicle Manufacturers' Association, Canada exported about 93% of the vehicles it manufactured to the U.S.
Even before the Trump administration took office, automakers were already making large-scale U.S. capacity investments to enhance the flexibility of their production strategies. Just this month, several more companies announced new U.S. projects.
On Tuesday, Hyundai announced it would invest $21 billion in its U.S. operations, including a $5.8 billion steel plant in Louisiana to support vehicle production at its Georgia and Alabama plants.
Tesla also recently announced plans to invest nearly $200 million to build a plant near Houston.
Editor's note: This article has been supplemented with additional information based on the White House fact sheet and the official proclamation imposing the tariffs.