President Trump announced Wednesday a 25% tariff on imported auto parts and cars beginning next week.
Mexico, the largest exporter of auto parts to the U.S., will be most significantly affected, followed by Canada, China, Japan, and South Korea. The tariffs could substantially disrupt the automobile supply chain, as parts often cross borders multiple times during assembly.
Despite widespread concern, President Trump remained optimistic about issuing the tariffs.
"I think our automobile business will flourish like it's never flourished before," Trump said in remarks from the Oval Office.
For cars imported under the USMCA trade agreement, the White House stated that the decisions on how to tariff auto parts under the agreement are still pending.
While the United Auto Workers union praised the move, industry representatives warned of consequences for consumers and the market.
"The tariffs imposed today will make it more expensive to produce and sell cars in the United States, ultimately leading to higher prices, fewer options for consumers, and fewer manufacturing jobs in the U.S.," said Jennifer Safavian, CEO of Autos Drive America, representing companies including BMW, Hyundai, and Toyota.
The auto industry tariffs are part of Trump's broader trade agenda, which includes previously imposed tariffs on Chinese goods, steel, aluminum, and some products from Canada and Mexico. The administration plans to announce additional "reciprocal tariffs" on April 2, which Trump has termed "Liberation Day."
According to NPR, the White House officials claim foreign companies will lower their prices to absorb tariff costs, though they provided no supporting data.
