President Trump fulfilled his promise by implementing a 25% tariff on foreign automakers, covering all cars and light trucks not manufactured in the United States, along with specific auto parts. During a news conference at the White House, Trump signed an executive order to put these tariffs in effect, aiming to boost economic growth significantly.
These tariffs are scheduled to commence on April 2 and will be in addition to existing tariffs. The White House projects the annual collection of around $100 billion in duties from these measures.
The announcement caused the stock prices of major automakers like GM, Stellantis, Ford, Tesla, BMW, Porsche, Volkswagen, and Mercedes-Benz to decline. While the impact of the tariffs will mainly affect foreign automakers, domestic companies such as Ford, GM, and Stellantis, known as the Big Three, are also concerned about potential disruptions in their supply chains and increased production costs.
Initially, the tariffs are directed towards fully assembled vehicles, but the executive order and accompanying fact sheet indicate that components like engines, transmissions, powertrain parts, and electrical elements will also be subject to tariffs.
Trump plans to declare April 2 as "Liberation Day" for the United States, symbolizing a stand against what he perceives as unfair trade practices by other nations. The effects of the new tariffs on imported vehicles are expected to lead to price hikes ranging from $3,000 to $12,000, as per analyses from various data firms.
In response to the tariffs, European automakers are considering different strategies. BMW intends to absorb the costs temporarily, while Porsche is inclined to pass on the expenses to consumers directly.
Notably, there is uncertainty surrounding how these tariffs might impact automakers both in the US and globally, with the potential for significant price increases for various car models. Analysts anticipate further developments in the coming weeks but acknowledge the current lack of details as frustrating for investors.