US President Donald Trump has announced sweeping new tariffs on imported vehicles and automotive parts, citing a growing threat to US national security.
In a proclamation issued on March 26, Trump invoked Section 232 of the Trade Expansion Act to impose a 25% tariff on imported passenger vehicles and light trucks — including sedans, SUVs, minivans and cargo vans — as well as key parts such as engines, transmissions and electrical components.
The tariffs will take effect from April 3, 2025, and are aimed at bolstering America’s domestic auto industry, which Trump says has been “undermined by excessive imports.”
In the proclamation, Trump says: “I find that imports of automobiles and certain automobile parts continue to threaten to impair the national security of the United States and deem it necessary and appropriate to impose tariffs.”
The move follows a 2019 Commerce Department report that found automobile imports were harming America’s industrial base. Trump concurred with that finding at the time, but negotiations with trading partners like the European Union and Japan failed to yield agreements that satisfied US concerns.
According to Trump, the situation has only worsened since the pandemic, which “exposed critical vulnerabilities and choke points in global supply chains”.
Despite trade agreements such as the United States-Korea Free Trade Agreement and the United States-Mexico-Canada Agreement (USMCA) and efforts to increase domestic manufacturing, the White House says American production remains stagnant while foreign carmakers grow stronger — often with the support of “unfair subsidies and aggressive industrial policies”.
In 2024, Americans bought about 16 million new vehicles — half of which were imported. Of the vehicles assembled in the US, Trump’s office claims the average “Made in America” content is just 40 to 50%.
While tariffs will apply broadly, some exemptions are planned. Vehicles qualifying under the USMCA can avoid full tariffs if importers provide documentation showing US-made content. In those cases, the 25% tariff will only apply to the non-US portion of the vehicle’s value.
A similar process for automobile parts is also planned, though it won’t be enforced until a system is established and published in the Federal Register.
Critics of tariffs have argued they raise consumer costs, but the White House pointed to several studies claiming otherwise. One 2024 economic analysis concluded that a global tariff of 10% could grow the US economy by $728 billion and create 2.8 million jobs.
Trump’s proclamation also sets the stage for further action, directing the Commerce Secretary to monitor imports and potentially expand the scope of tariffed parts in future.
“The threat to national security posed by imports of automobiles and certain automobile parts remains and has increased,” Trump says.
‘Bad for business’
In response, European Commission President Ursula von der Leyen issued a statement of concern.
“I deeply regret the US decision to impose tariffs on European automotive exports,” she says.
“The automotive industry is a driver of innovation, competitiveness, and high quality jobs, through deeply integrated supply chains on both sides of the Atlantic.”
“As I have said before, tariffs are taxes – bad for businesses, worse for consumers equally in the US and the European Union.
“We will now assess this announcement, together with other measures the US is envisaging in the next days.
“The EU will continue to seek negotiated solutions, while safeguarding its economic interests.
“As a major trading power and a strong community of 27 Member States, we will jointly protect our workers, businesses and consumers across our European Union.”
Japan sounds alarm
Japan is weighing its response to trade tensions with the United States, with Prime Minister Shigeru Ishiba warning that “all options are on the table” following US President Donald Trump’s announcement of a 25% tariff on imported cars and light trucks.
The new tariffs, set to take effect from April 3, were confirmed by the White House this week and aim to bolster America’s domestic auto industry, which Trump says has been “undermined by excessive imports.”
The move is expected to strike a heavy blow to Japan’s economy, which is heavily reliant on automotive exports to the US.
“Japan is a country that is making the largest amount of investment to the United States, so we wonder if it makes sense for (Washington) to apply uniform tariffs to all countries. That is a point we’ve been making and will continue to do so,” Ishiba told parliament on Thursday.
“We need to consider what’s best for Japan’s national interest. We’re putting all options on the table in considering the most effective response,” he added, without detailing specific retaliatory measures.
Japanese auto stocks plunged in early trade as investors reacted to the news.
Automobiles accounted for 28.3% of Japan’s total exports to the United States in 2024 — more than any other category — according to data from Japan’s Ministry of Finance. The auto industry also makes up around 3% of the country’s GDP and has been a key contributor to recent wage increases, as manufacturers distribute overseas profits to domestic workers.
Earlier this month, Masanori Katayama, chair of the Japan Automobile Manufacturers Association (JAMA), warned of the impact of US trade protectionism at a Tokyo press conference.
A 25% tariff “would have a negative impact overall on the economies of the United States and Japan”, Katayama says.
