President Donald Trump signed an executive order on Wednesday, imposing a 25% tariff on all imported cars, light-duty trucks, and certain auto parts. These tariffs will take effect on April 2, 2024, and will apply to finished vehicles and specific auto parts that are shipped into the United States, including American brands whose vehicles and parts are assembled outside the country. Currently, the tariff on imported vehicles is 2.5%.
During a news conference from the White House, Trump explained that the tariff will start at 2.5% and gradually increase to 25%.
The executive order specifies that the tariffs will go into effect at 12:01 a.m. EDT on April 3 for imported vehicles. For automobile parts, the tariff will take effect on the “date specified in the Federal Register for automobile parts, but no later than May 3.”
These latest tariffs represent an escalation of the Trump administration’s aggressive trade measures aimed at boosting domestic manufacturing in the United States. Trump emphasized that if a company builds its car in the U.S., there will be no tariff, which could benefit many companies that have already established their plants.
In 2024, the United States imported $219.49 billion worth of cars, representing a 4% increase compared to the previous year, according to trade data platform US Import Data.
Mexico was the leading source of imported vehicles to the United States in 2024, followed by Japan, South Korea, Canada, and Germany.
Auto industry experts caution that these tariffs could significantly increase the prices of new cars. For instance, Cox Automotive reported that vehicles imported from Mexico and Canada could face cost increases of $6,000 if the 25% tariffs are implemented next week. Approximately 44% of new vehicles sold in the United States are imported.
