The auto tariff will take effect on April 2, when the United States will impose reciprocal tariffs on its trading partners.
President Donald Trump on March 26 announced 25 percent tariffs on foreign cars in a move aimed at boosting domestic auto manufacturing.
Speaking to reporters at the Oval Office, Trump said that cars that are made in the United States will not face tariffs.
“I think our automobile business will flourish like it has never flourished before,” the president said.
The auto tariffs will go into effect on April 2, Trump said, the same day the United States will impose reciprocal tariffs on its trading partners. The president has dubbed the day as America’s “Liberation Day.”
The Trump administration projects that the auto tariffs will generate more than $100 billion in annual revenues, according to White House staff secretary Will Scharf.
The president has also recently mentioned levies on lumber, pharmaceuticals, and semiconductor imports.
Trump reiterated that he plans to introduce tariffs on pharmaceutical products “to bring our pharmaceutical industry back.
“We don’t make anything here in terms of drugs, medical drugs, different types of drugs that you need, medicines,” Trump said. “It’s in our countries, largely made in China. A lot of it is made in Ireland.”
Shares of U.S. automakers slumped midweek after reports circulated that Trump would soon announce auto tariffs. Ford fell 1 percent, General Motors shed 1.4 percent, and Tesla Motors fell about 6 percent.
The broader financial markets also slumped. The tech-heavy Nasdaq Composite Index plunged nearly 400 points, or 2.2 percent. The broader S&P 500 declined about 75 points, or 1.3 percent. The blue-chip Dow Jones Industrial Average dropped more than 200 points, or 0.5 percent.
Automakers have started considering plans to shift more car production to the United States.
Earlier this week, South Korea-based Hyundai announced a $20 billion U.S. investment, including a $5.8 billion manufacturing plant in Louisiana.
Depending on the tariff rates, Volvo might move the production of some of its models to the United States. Volvo CEO Jim Rowan said the company possesses the capacity at its American assembly facilities to support the shift.
“We have space, paint shops, the buildings, all that’s there,” Rowan said. “We just need to make a final decision on which models and which platforms that we would move to the USA.”
Stellantis plans to reopen a shuttered Illinois plant in 2027. Honda might manufacture its next-generation Civic hybrid in Indiana rather than Mexico.
Over the past week, there have been mixed signals about whether these tariffs will be industry-specific or universal.
By Andrew Moran
