President Trump fulfilled his pledge to impose tariffs on foreign car manufacturers by implementing a 25% tax on all automobiles and light trucks that are not produced in the United States, along with certain auto components. Trump, while at the White House, stated that this move is expected to generate unprecedented economic growth. The tariffs will come into effect on April 2 and are anticipated to bring in around $100 billion in tariffs annually.

Major car manufacturers like GM, Stellantis, and Ford experienced stock declines in response to the announcement. The impact of these tariffs is likely to affect foreign automakers predominantly, but domestic companies such as Ford, GM, and Stellantis, who also manufacture vehicles outside the U.S., are concerned about the potential rise in production costs due to disruptions in the auto supply chain.

Although the initial focus of the tariffs is on fully assembled automobiles, the executive order has been expanded to include various auto parts like engines, transmissions, and electrical components. Trump is set to announce further tariffs on "Liberation Day" on April 2, emphasizing the need for reciprocal trade due to what he perceives as unfair trade practices by other countries.

Forecasts indicate that these tariffs could result in price increases ranging from $3,000 to $12,000 for non-luxury vehicles. European car manufacturers are considering different strategies to mitigate the impact, with BMW planning to absorb costs temporarily and Porsche intending to pass them on to consumers directly.

Analysts predict significant challenges for both foreign and U.S. automakers as a result of these tariffs, potentially leading to an average car price increase of $5,000 to $10,000, depending on the brand and model. The situation is evolving, with details still being clarified as investors brace for potential changes in the coming weeks.