President Donald Trump announced on Wednesday that the U.S. will impose a 25 percent tariff on all imported cars that are not manufactured in the United States. The new tariffs, which apply only to finished vehicles and not auto parts, are set to take effect on April 2—the same day Trump’s long-awaited reciprocal tariffs are scheduled to begin.
The current tariff on foreign-made cars sits at 2.5 percent, meaning this move represents a significant increase. Roughly half of all cars sold in the U.S. are imported, making this policy a potential game-changer for the auto industry. White House Press Secretary Karoline Leavitt confirmed that the tariffs would be signed into action later Wednesday.
Trump Calls It ‘Liberation Day’ for America
During an Oval Office press conference, Trump framed the move as a step toward economic fairness.
“This is the beginning of Liberation Day in America,” Trump declared. “We’re going to charge countries that are doing business in our country and taking our jobs, taking our wealth, taking a lot of things that they’ve been taking over the years and taking so much out of our country.”
Trump has consistently described April 2 as "Liberation Day", as it marks the launch of his broader reciprocal tariff plan. Under this policy, the U.S. will match tariff rates imposed by foreign trading partners on American goods.
While the initial proposal for reciprocal tariffs was expected to be aggressive, Trump suggested in a Tuesday night interview with Newsmax that the policy may be “more lenient than reciprocal” because equal tariffs “would be very tough for people.”
Global Reactions and Economic Impact
The European Union is already preparing countermeasures, as many of its car manufacturers—including BMW, Mercedes-Benz, and Volkswagen—export large volumes of vehicles to the U.S. The new tariff could also strain relations with Japan and South Korea, home to major carmakers Toyota, Honda, Hyundai, and Kia.
Following Trump’s announcement, automaker stocks fell sharply:
Ford and Toyota each dropped about 2%
General Motors declined 5%, having already faced pressure after the White House hinted at new tariffs earlier in the day
Trade experts warn that higher tariffs could raise vehicle prices for American consumers, particularly for luxury and electric vehicles, which are frequently imported. At the same time, Trump insists the policy will push foreign automakers to invest more in U.S. production.
“They’re already looking for sites,” Trump said, suggesting that car manufacturers will now be incentivized to build factories in the U.S.
Limited Exemptions and Existing Tariffs
Trump emphasized that exemptions on the new tariffs will be minimal.
“I know there are some exceptions, and it’s an ongoing discussion, but not too many, not too many exceptions,” he said.
His administration has already imposed tariffs on various goods, including:
20% tariffs on Chinese imports
25% tariffs on aluminum and steel
25% tariffs on Canadian and Mexican goods outside the U.S.–Mexico–Canada Agreement (USMCA)
Notably, Canadian and Mexican auto imports tied to General Motors, Ford, and Stellantis have been given a one-month reprieve, delaying the impact of tariffs that were initially scheduled for early March.
What’s Next?
With just days until the April 2 deadline, automakers, foreign governments, and American consumers are bracing for the impact of Trump’s tariff plan. The key question now is how trading partners will respond—and whether negotiations will ease the potential for an escalating trade war.
