Trump Unleashes 25% Tariffs on Imported Cars

President Trump announced a new 25% tariff on foreign-made cars Wednesday — impacting roughly half of all vehicles sold in America — arguing it would boost domestic manufacturing.

Trump, 78, announced the move in the Oval Office, saying that “this is gonna lead to the construction of a lot of plants” to build cars domestically.

“We’ll effectively be charging a 25% tariff, but if you build your car in the United States, there is no tariff,” he said.

White House staff secretary Will Scharf told Trump that the action was projected to raise $100 billion in annual revenue — though analysis has suggested it may also sharply reduce import volume.

A Trump administration official later said that the new tariff also would apply to auto parts, and that the fees would be layered on top of current tariffs of 2.5% on cars and 25% on light trucks.

More than half of cars sold in the US are foreign-produced, largely from Mexico, Canada, Japan, South Korea and Germany.

The official said Canadian and Mexican-made cars would be tariffed based on their composition of parts.

“If a car from Mexico comes in with 50% American parts and 50% foreign parts, the tariff will be 50% of 25%, which is 12.5%,” the official said.

“The foreign trade cheaters have turned America into a lower-wage assembly operation for foreign parts that threatens our national security because it’s eroded our defense and manufacturing industrial base,” said White House trade adviser Peter Navarro.

“Half of the roughly 16 million cars, SUVs and light trucks Americans bought in 2024 were imports — that’s 50%. Of the remaining 8 million units, more than half of these cars were assembled from foreign parts. So what that means is less than 25% of the cars sold in America contain US content on average. That stops right now with the Trump auto tariffs.”

The idea of a 25% tariff on cars previously was studied by government trade experts.

A US International Trade Commission report last year found that “[a] new 25% tariff on U.S. imports from outside of North America would reduce vehicle imports by 73.9%, increase average prices of vehicles in the United States by 5.0%, and increase variable profits from domestic production by 5.2%”

Trump said while announcing the new tariffs that car companies with manufacturing plants in the US already are “thrilled” about the new tariff, which he said would take effect on April 2. The administration official said that tariffs on car parts specifically from Canada and Mexico would be adopted later following an implementation study.

The president added that the levies would remain in effect for the remainder of his term.

“Oh, this is permanent, yeah, 100%,” Trump confirmed.

“I think ultimately we could probably have anywhere from $600 billion to $1 trillion [that] will be taken in over a relatively short term period, meaning a year from now, but starting right away, starting right away, I think we’ll go from 600 to a trillion within two years,” he said.

“This is a very simple system, and the beauty of the 25 — it’s one number … And that number is going to be used to reduce debt greatly in the United States and to build things and reduce taxes. Basically, I view it as reducing taxes and also reducing debt.”

Trump earlier this month slapped 25% tariffs on imports from China, Canada and Mexico over fentanyl smuggling and illegal immigration, but he temporarily exempted most imports from America’s neighbors.

Last month, he imposed a stiffer 25% tariff on steel and aluminum, without exceptions for major importers that previously were in effect.

Trump plans to unveil a raft of “reciprocal” tariffs on April 2 to penalize imports from nations with higher levies on US imports and those with high non-tariff barriers to trade — though he said Wednesday he would be more “lenient” than expected.

He also has teased plans to tariff lumber, pharmaceuticals, computer chips and copper.

Although critics have argued that the tariff policies can increase consumer costs, unleashing a new round of inflation after prices soared 22% during former President Joe Biden’s administration, Trump has pointed to low inflation during his first term, when he adopted some tariffs and used the threat of others to coerce reforms abroad.

Trump also said Wednesday that he may reduce tariffs on China if they agree to divest from social media platform Tiktok.

“Maybe I’ll give them a little reduction in tariffs or something to get it done,” he said to reporters. “Sounds like something I’d do.”