Trump imposes 25% tariffs on all foreign-made vehicles and auto parts

US President Donald Trump on Wednesday announced sweeping new tariffs on all foreign-made cars and light trucks, along with select auto parts, following through on a campaign pledge to support American manufacturing.

Effective April 2, the 25% tariffs will apply to imported vehicles and components such as engines, transmissions, powertrain parts, and electrical systems. Trump signed the executive order at the White House, calling the move “Liberation Day” for the US auto industry.

“This will continue to spur growth that you’ve never seen before,” Trump said during remarks from the White House. The administration estimates the new duties could generate up to $100 billion annually.

Markets reacted swiftly. Shares of US-based automakers GM, Ford, Stellantis, and Tesla dipped in after-hours trading. Earlier in the day, German-listed stocks of BMW, Porsche, Volkswagen, and Mercedes-Benz fell following a press briefing by White House press secretary Karoline Leavitt.

While the tariffs are aimed primarily at foreign manufacturers, domestic automakers are expressing concern. Companies like GM, Ford, and Stellantis often dubbed the Big Three also build vehicles and source parts from Canada, Mexico, and China, meaning the policy could raise production costs across the board.

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The initial scope of the tariffs was believed to cover finished vehicles only, but an official fact sheet confirmed that key components would also be affected, further complicating supply chain logistics for carmakers.

Trump defended the move as a step toward trade fairness, accusing foreign governments of exploiting US markets. “Other countries have ripped us off for decades,” he said. “These tariffs are reciprocal.”

Industry analysts warn of a ripple effect on prices. Research firms estimate that the tariffs could raise the cost of non-luxury imported vehicles by $3,000 to $12,000. European carmakers are weighing different responses: BMW signaled it may absorb the added costs in the short term, while Porsche said it expects to pass those costs onto consumers.

Dan Ives, an analyst at Wedbush, described the announcement as a potential “hurricane-like headwind” for both foreign and US automakers. “If they hold in their current form, these initial tariffs could push average car prices up $5,000 to $10,000 depending on the make and model,” Ives wrote Wednesday night. “This may still be part of a broader negotiation, but for now, investors will be frustrated with the lack of clarity.”

Further tariff announcements are expected on April 2.