President Trump made good on his promise to impose tariffs on foreign automakers, imposing 25% duties on all cars and light trucks not made in the United States, as well as “certain auto parts.”
“This will continue to spur growth that you’ve never seen before,” Trump said from the White House on Wednesday, signing an executive order putting the tariffs in place.
The 25% tariffs are set to take effect April 2 and add to existing tariffs. The White House estimates that $100 billion in annual duties will be collected.
Unsold 2023 Q5 sports-utility vehicle sits outside an Audi dealership Sunday, Feb. 11, 2024, in Broomfield, Colo. (AP Photo/David Zalubowski) · ASSOCIATED PRESS
White House press secretary Karoline Leavitt said Trump would make the announcement earlier today during a news briefing with reporters. Shares of GM (GM), Stellantis (STLA), Ford (F) and Tesla (TSLA) traded lower in the aftermarket following Trump making the tariffs official. BMW (BMW.DE), Porsche (P911.DE), Volkswagen (VOW.DE), and Mercedes-Benz (MBG.DE) trading in Germany dropped earlier in the day following Leavitt’s news conference.
Though the new tariffs will hit mostly foreign automakers, domestic automakers, including the Big Three — Ford, GM, and Stellantis — are concerned about their impact too. GM, Ford, and Stellantis build vehicles in Canada, Mexico, and China, and they foresee higher production costs due to tariffs’ effect on the auto supply chain.
Wednesday’s tariffs seem to initially target only finished auto products, however the executive order and published fact sheet added parts like “engines, transmissions, powertrain parts, and electrical components” to the list of foreign goods subject to tariffs.
Trump has deemed April 2, the day on which he is slated to announce further tariffs, “Liberation Day” for the US, saying other countries have “ripped [us] off” and that any new tariffs are “reciprocal.”
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While the costs of the new auto tariffs on foreign imports are hard to quantify, analysis from various data firms suggest price hikes of $3,000 to as much as $12,000 for non-premium autos.
European automakers have suggested a range of options for dealing with tariffs. BMW said it will absorb the costs for a short time, while Porsche suggested it would pass on costs directly to consumers.
“In our view these initial tariffs (if they hold in their current form) would be a hurricane-like headwind to foreign (and many US) automakers and ultimately push the average price of cars up $5k to $10k depending on the make/model/price point,” Wedbush analyst Dan Ives wrote late Wednesday night. “We continue to believe this is some form of negotiation and these tariffs could change by the week… We expect to learn more over the next week but for now investors will be frustrated by this announcement with few details.”
