Trump sets 25% tariffs on auto imports

What happened

President Donald Trump said Wednesday he would impose a "25% tariff on all cars not made in the U.S." starting April 3. The White House said the tariffs would also apply to most auto parts, temporarily excluding those produced under the U.S.-Mexico-Canada trade agreement.

Who said what

"This is permanent," Trump told reporters in the Oval Office. "I think our automobile business will flourish like it's never flourished before." The tariffs could "increase domestic auto production," but likely not for "several years," The New York Times said. The steep import taxes "could also backfire economically, harming the U.S. auto industry by squeezing its profits and slowing its sales."

If the full tax is passed onto consumers, prices on imported vehicles "could jump by $12,500, a sum that could feed into overall inflation," The Associated Press said. Cox Automotive predicted a $6,000 increase on cars made in Mexico and Canada and an extra $3,000 for cars built in the U.S., given the tax on auto parts. "Bottom line: lower production, tighter supply and higher prices are around the corner," Cox chief economist Jonathan Smoke said Wednesday.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

What next?

The auto tariffs will be on top of other import taxes Trump has imposed in his growing trade war, including "reciprocal tariffs" he plans to roll out April 2.