Just when you thought you had your heart set on that new insert any foreign-made car, hold up. The White House just announced a significant new trade policy that will impose a 25% tariff on all foreign-made cars and light trucks entering the United States. President Trump signed the executive order on Wednesday, framing the move as a boost to domestic economic growth.
“This will continue to spur growth that you’ve never seen before,” Trump stated during the signing ceremony. According to White House estimates, the tariffs, set to take effect April 2, are expected to generate approximately $100 billion in annual duties.
Financial markets reacted immediately to the news, with shares of major European automakers including BMW, Porsche, Volkswagen, and Mercedes-Benz all declining following the announcement. Domestic automakers like GM, Ford, and Stellantis also saw their stock prices dip, reflecting concerns about the broader impact on automotive supply chains.
While the policy directly targets foreign manufacturers, American automakers anticipate ripple effects. Many U.S. companies operate production facilities in Canada, Mexico, and China, and industry analysts warn the tariffs could increase manufacturing costs. The policy comes alongside existing tariffs on Chinese goods that already affect automotive part imports.
President Trump has designated April 2 as “Liberation Day” for American industry, arguing that the measures create fairer trade conditions. “Other countries have ripped [us] off,” he said, describing the new tariffs as “reciprocal.”
Analysts predict the tariffs could increase vehicle prices by $3,000 to $12,000 for non-luxury models. Automakers are preparing varied responses – BMW plans to temporarily absorb the additional costs, while Porsche indicated it would pass them directly to consumers.
The move represents the latest in a series of protectionist trade measures by the administration. It continues its focus on domestic manufacturing growth even as critics warn of potential impacts on consumer prices and international trade relations.