Updated March 26, 2025 at 20:43 PM ET
President Trump said on Wednesday that he will impose 25% tariffs on imported cars and car parts starting next week, using his national security powers to take the action.
"I think our automobile business will flourish like it's never flourished before," Trump said in remarks from the Oval Office.
The United Auto Workers union praised the move, saying it could mean more shifts for workers at plants with spare capacity.
The latest policy is yet another example of the president's tariff-centric second-term economic agenda. Thus far, Trump has imposed tariffs on Chinese goods, steel and aluminum, and some goods from Canada and Mexico.
Mexico is by far the largest exporter of auto parts to the U.S., followed by Canada, China, Japan, and South Korea, according to Commerce Department data. The list of the biggest vehicle exporters is similar: Mexico far outstrips other countries, followed by Japan, South Korea, Canada, and Germany.
The tariffs under the USMCA, a trade agreement ratified during Trump's first term, would be more complicated. Cars imported under the USMCA will be tariffed only on their non-U.S. content, the White House said. In addition, the administration is still deciding how to tariff auto parts imported under the USMCA, an administration official told reporters.
The tariffs not only on cars but car parts could have complex effects on the automobile supply chain. As NPR has reported, car parts can cross borders multiple times as a car is assembled. Auto industry analysts told NPR earlier this month that they expect these tariffs to raise car prices for U.S. consumers.
Foreign automakers blasted the new tariffs.
"The tariffs imposed today will make it more expensive to produce and sell cars in the United States, ultimately leading to higher prices, fewer options for consumers, and fewer manufacturing jobs in the U.S.," said Jennifer Safavian, CEO of Autos Drive America, a group that represents companies including BMW, Hyundai, and Toyota.
Trump also plans a wave of what he calls "reciprocal tariffs" to be announced on April 2, which he has called Liberation Day. The taxes on imports have caused plummeting stock markets and consumer confidence, and have left businesses and consumers uncertain about what they want to invest in.
The Trump administration has given multiple rationales for these tariffs, but it has emphasized boosting manufacturing as the chief goal.
U.S. tariffs are paid to the government by businesses in the U.S. that are importing goods. Studies of tariffs imposed in Trump's first term have shown they were overwhelmingly paid by U.S. businesses and consumers. White House officials have said that foreign companies will lower their prices to compensate for tariffs, essentially eating the cost. However, when asked by NPR, the officials provided no data to support this.
Trump's tariff policy has been chaotic throughout this presidency. In addition to the tariffs already imposed, he has threatened still more tariffs on a range of goods from around the world, at times announcing a tariff only to then delay or retract it.
This week, Trump floated what he called a "secondary tariff" of 25% on goods from any country buying oil or gas from Venezuela.
The White House has given few specific details on what to expect next week when Trump announces reciprocal tariffs — though Trump said on Wednesday that they would be more "lenient" and "conservative" than some might expect.
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