President Donald Trump Announces 25% Tariff on Foreign Cars
President Donald Trump announced on Wednesday from the White House that he’s hitting all foreign cars with a 25% tariff starting April 2, and said collections will begin the next day.
“All cars that are not made in the United States,” Trump said, will be taxed. He made it clear that cars built within the country will not be affected, saying there’s “absolutely no tariff” for them. He signed the new trade order inside the Oval Office.
According to a report from CNBC, Trump formalized the tariffs through a presidential proclamation. His longtime aide, Will Scharf, told reporters at the White House that the new rule includes foreign-made light trucks too, and stacks on top of all existing duties. “Over $100 billion of new annual revenue” is what Scharf claimed this move will generate for the U.S.
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Trump didn’t offer many specifics about how it’ll work, especially considering most vehicles today are built from thousands of individual parts sourced from several different countries. Still, he told reporters the government would launch “very strong policing” to monitor which components trigger the tariffs. That means federal agents will have to track exactly which parts are foreign and where they come from—no easy task in a system where even a single sedan might carry pieces from 20 different countries.
The move instantly drew backlash from Europe. European Commission President Ursula von der Leyen responded within hours, saying the European Union would continue pursuing negotiations but wouldn’t roll over. “Tariffs are taxes — bad for businesses, worse for consumers equally in the US and the European Union,” she said in a formal statement Wednesday.
As expected, the stock market didn’t sit still. After-hours trading saw shares of General Motors, Ford Motor, and Stellantis all drop about 5%. All three companies have some manufacturing capacity outside the U.S., even though they assemble a lot of cars within it too.
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Trump didn’t throw them under the bus completely. He offered GM, Ford, and Stellantis a one-month exemption from the new 25% tariff—for imports from Mexico and Canada only—if their cars qualify under the rules in the United States-Mexico-Canada Agreement, or USMCA. That deal replaces the old NAFTA structure and has stricter guidelines around regional production. The waiver is set to expire at the end of April.
The announcement didn’t come out of nowhere. Trump already warned on Monday during a Cabinet meeting that auto tariffs were on the way. “We’ll be announcing that fairly soon over the next few days, probably, and then April 2 comes, that’ll be reciprocal tariffs,” he said earlier this week. The plan is part of what Trump calls his “reciprocal tariff” policy. It targets countries that impose high duties on U.S. goods but expect low barriers coming into the American market.
Business executives say these surprise rollouts have made it impossible to plan ahead. Trump’s trade decisions change fast, and sometimes without notice. Even companies that support American manufacturing say they don’t know how to prepare anymore.
Musk Left Out of Decision, Tesla Parts Still Vulnerable
One person not involved in the decision was Elon Musk. Trump confirmed that himself Wednesday, telling reporters Musk “may have a conflict” and had “never asked me for a favor in business whatsoever.” Musk is Trump’s top advisor for federal operations, but this time he had no input.
Musk’s involvement with the administration goes deeper than just advice. He donated $290 million to Trump’s 2024 campaign and currently leads the Department of Government Efficiency, or DOGE, which is supposed to reduce federal spending and downsize bloated agencies. Even with that power, Musk didn’t weigh in on the car tariffs, according to Trump.
That didn’t stop Tesla from getting a spotlight moment this month. Trump turned the White House’s South Lawn into a temporary Tesla display, ordering five of the company’s electric vehicles to be delivered so he could walk around and inspect them. Afterward, he posted on Truth Social that he was planning to buy one himself to “support Elon” and his companies. During the walkthrough, Trump called the designs “beautiful” and pointed at the sharp, stainless-steel Cybertruck.
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When asked whether Tesla would benefit from the new import penalties, Trump said the effect would likely be “net neutral or they may be good.” He pointed out that Tesla has major factories in Fremont, California and Austin, Texas, and repeated that “anybody that has plants in the United States — it’s going to be good for them.”
But Tesla doesn’t build everything at home. The company recently wrote to the U.S. Trade Representative warning that “even with aggressive localization” of production, certain vehicle components are “difficult or impossible to source within the United States.” The list of imported parts includes suspension systems, brake assemblies, glass, panels, printed circuit boards, and other electrical gear. A lot of these still come from Canada, Mexico, and China.
Tesla isn’t the only one with that problem, but their international parts footprint puts them in a tough spot. And while the tariffs don’t directly mention Tesla, any imported part can trigger a tax. The policing that Trump promised would mean border checks could flag individual parts even if the final car is assembled in Texas.
There’s also a bigger fight happening in the electric vehicle market. More automakers are building EVs now than ever before, squeezing Tesla’s dominance. But not everyone gets to play in the American sandbox. BYD, the top electric vehicle manufacturer in China, still hasn’t been allowed to sell its cars in the U.S. With Trump in office and tariffs being thrown around like darts, that’s unlikely to change anytime soon.
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