On Wednesday, President Donald Trump signed an executive order announcing that he would impose a 25% tariff on imported cars and car parts, set to take effect on April 3, per The New York Times.
Trump said the move would incentivize automakers to move manufacturing into the United States and end a “ridiculous” supply chain where cars are manufactured across country lines. He added that if automakers built their cars in the U.S., they wouldn’t have to pay the tariff.
“Anybody who has plants in the United States, it’s going to be good for,” Trump stated, per The Times.
President Donald Trump holds up a signed executive order. Photo by Win McNamee/Getty Images
Close to half of all vehicles sold in the U.S. in 2024 were imported, according to research firm GlobalData.
Last year, Mexico was the top country for U.S. car imports, manufacturing cars with a total value of over $78 billion. Japan, South Korea, and Canada each imported at least $30 million worth of vehicles into the U.S. in 2024, with Japanese brand Toyota joining American brands Ford and General Motors as one of the top three bestselling U.S. car brands.
Related: These Are the Economic Executive Orders President Donald Trump Has Signed So Far
According to Axios, the foreign automakers hit the hardest by the tariffs will be Volvo, Mazda, and Volkswagen, which only make about 20% or less of their U.S.-sold cars within the U.S.
Hyundai-Kia, Mercedes, BMW, and Toyota will also feel the impact of the tariffs; these automakers manufacture less than half of their U.S.-sold vehicles in the U.S., per Axios. General Motors, Ford, and Jeep owner Stellantis also have crucial production hubs in Mexico.
Experts agree that the tariffs will make buying a new car more expensive as automakers are set to raise prices to make up for some of the tariff costs. According to Business Insider, Wedbush analysts said the average price of cars could increase by $5,000 to $10,000 when the tariffs take effect, while Anderson Economic Group analysts placed the increase between $4,000 and $12,200.
For the Trump administration, the auto tariffs are more than a way to boost domestic manufacturing — they could also increase government revenue. According to the Associated Press, the White House expects to bring in $100 billion in revenue annually from the tariffs.
The United Auto Workers, a labor union with more than 400,000 active members, released a statement on Wednesday praising Trump’s actions as “a major step in the right direction for autoworkers and blue-collar communities across the country.”
“With these tariffs, thousands of good-paying blue-collar auto jobs could be brought back to working-class communities across the United States within a matter of months, simply by adding additional shifts or lines in a number of underutilized auto plants,” the statement read.
