President Donald Trump has declared additional 25% import duties on automobiles and auto parts entering the United States.
According to Trump, the most recent tariffs will go into force on April 2 and businesses importing cars would be charged the following day. Parts taxes will begin in May or later.
In addition to vowing to boost employment and investment in the US, the president said the legislation would result in “tremendous growth” for the industry.
But according to analysts, the action is expected to cause prices to rise, strained relations with allies, and the temporary halt of major auto production in the U.S.
Trump’s most recent action has the potential to disrupt global supply networks and the automobile sector.
About eight million cars were imported into the US last year, making up about half of total sales and $240 billion (£186 billion) in trade.
South Korea, Japan, Canada, and Germany are the next top auto suppliers to the United States, after Mexico.
Under the conditions of their long-standing free trade agreement, numerous US automakers also operate in Mexico and Canada.
According to the White House, the new tariffs on auto parts from Canada and Mexico are suspended while the US Customs and Border Patrol establishes a mechanism to determine the taxes. Every day, items valued at billions of dollars cross the borders into the bordering countries.
On Wednesday, shares in General Motors slid roughly 3%, while Stellantis – the owner of Jeep and Chrysler – fell 3.6%.
In a post on X, Elon Musk said Tesla would be affected by the measures. “The tariff impact on Tesla is still significant,” he said.