Trump orders 25% auto tariff on all imported cars, light-duty trucks starting April 3
President Donald Trump signed an executive order Wednesday imposing 25% tariffs on all cars and light-duty trucks imported into the U.S., saying it would force more automakers to move into the country and create jobs.
The executive order says the tariffs will take effect on or after 12:01 a.m. EDT April 3 for automobiles, and on the "date specified in the Federal Register for automobile parts, but no later than May 3, 2025.”
Automakers, including the Detroit Three, have been warning for weeks that Trump's threatened tariffs could hurt their businesses and increase prices even as analysts have said they could result in a drop in auto sales.
"You're going to see prices coming down," Trump said, arguing that his tariff threat is already driving companies to open more plants to make cars in the U.S., including one he said Honda plans to expand in Indiana. "We're already setting records for new plants."
That's not true. Honda has said it will build the next-generation Civic at its existing plant in Indiana rather than in Mexico, but “Honda did not announce plans for a new plant in the U.S. at this time," according to a statement provided to the Free Press from America Honda spokesperson Chris Martin. The statement added: "We have invested over $3 billion in advanced vehicle manufacturing in America in just the past three years, with a cumulative total of more than $24.7 billion" over 45 years.
Said Trump, "It’s off to the races. I think our automobile business will flourish like it's never flourished before."
While some, including the UAW, applaud Trump's move, others say it will cause new vehicle prices to rise and be detrimental to many automakers.
"In our view these initial tariffs (if they hold in their current form) would be a hurricane-like headwind to foreign (and many U.S.) automakers and ultimately push the average price of cars up $5,000 to $10,000 depending on the make/model/price point," Dan Ives, managing director at Wedbush Securities, wrote in a research note Wednesday night. "We continue to believe this is some form of negotiation and these tariffs could change by the week, although this initial 25% tariff on autos from outside the U.S. is almost an untenable, head-scratching number for the U.S. consumer."
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'A very simple system'
While Trump in the recent past has postponed auto tariffs, he said he wouldn't do that in this case. "This is permanent, 100%," he said.
Trump made it clear that only cars and trucks made inside the U.S. are exempt from the tariff. He also appeared to indicate that his tariffs are also intended to impact the supply lines of American car companies, including General Motors, Ford and Stellantis, that see the vehicle assembly process move from plants in Canada and Mexico and ultimately back to the U.S. "It's ridiculous," he said of the current supply system. "This is a very simple system."
An aide said the tariffs are expected to produce $100 billion a year in revenue for the federal government. Trump pegged it at potentially more than six times that over two years.
The exact details of the tariffs must still be sorted out, but it appears there will be some exemptions.
On social media platform X, Harrison Fields, the White House principal deputy press secretary, acknowledged that while the tariff applies to “key automobile parts” including engines, transmissions, powertrain parts and electrical components, as well as assembled cars and trucks, parts compliant with the U.S.-Mexico-Canada agreement are “tariff-free” for now, though he didn’t say that USMCA-compliant vehicles receive the same treatment.
That was confirmed by U.S. Rep. Debbie Dingell, D-Ann Arbor.
"People are still trying to understand what the impact will be but it appears at this moment in time USMCA-compliant vehicles and parts may not be subject" to the tariffs in full at least for now, Dingell said.
Dingell also said she remains a supporter of using tariffs to make trade more fair and help bring manufacturing back to the U.S. “But we must allow the auto companies and parts suppliers the time they need to adjust,” she said.
Dingell said in a statement the announcement appears to "be a step toward onshoring supply chains and bringing manufacturing back to our country," adding that she will work to support these goals. But, Dingell said, production changes can’t take place overnight.
"Our domestic auto industry relies on a closely integrated North American supply chain, which is why it’s important this includes exceptions for USMCA-compliant imports," Dingell said. "However, it is time to renegotiate USMCA.”
Initial reaction shows concern for higher new car prices
In an emergency news conference Wednesday evening, Canadian Prime Minister Mark Carney condemned Trump's announcement as a "direct attack" on Canada's autoworkers.
"Even during a caretaker period of government, we have anticipated this possibility," said Carney, who has called a snap election for April 28 after taking over for Justin Trudeau. "We have put in place the mechanisms where, if it is appropriate to put in place retaliatory tariffs ... we will take the steps that are in the interests of Canadian workers. We will fight in a unified way," he said. "We are entirely aligned in terms of the seriousness we are taking this and the seriousness of our response."
UAW President Shawn Fain said in a statement Wednesday evening that the union applauds the move, and said the administration has made history "for stepping up to end the free trade disaster that has devastated working-class communities for decades."
"The UAW and the working class in general couldn’t care less about party politics; working people expect leaders to work together to deliver results," Fain said. "The UAW has been clear: We will work with any politician, regardless of party, who is willing to reverse decades of working-class people going backwards in the most profitable times in our nation’s history."
Fain said the tariffs are a big step in the right direction for autoworkers and blue-collar communities and will help to bring union jobs back to the States. In addition to praising the Trump administration, the UAW called on U.S. automakers to swallow tariff costs on behalf of their shareholders, workers and customers.
"After they shift their supply chains and investments to the U.S., auto companies that have enjoyed years of record profits should absorb the cost of these tariffs rather than passing them on to consumers, and the UAW would support legislative or regulatory action requiring them to do so," the union said in the statement. "Workers must be held harmless during any disruption that accompanies the reshoring process, with financial support from the federal government if necessary."
Detroit automakers did not immediately provide a reaction to the news, but Autos Drive America, a group that represents the U.S. operations of international carmakers whose members collectively produce nearly half the vehicles made in the United States, issued a statement indicating concern that this move will raise new car prices.
“At a time when cost is the number one concern for American car buyers, U.S. automakers are working to provide a range of affordable vehicles for consumers,” Jennifer Safavian, CEO of Autos Drive America, said in a statement. “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.”
In February 2025, the average transaction price for a new vehicle in the United States was $48,039, a 1% increase from the year-ago period, according to Kelley Blue Book.
Parts makers, others trying to sort out what's included
Megan Gardner, spokesperson for the group that represents auto parts suppliers, called MEMA, told the Free Press late Wednesday the group is reviewing a communication from the White House and is trying to determine the details and scope of the tariffs. It appears key automobile parts are included. MEMA will hold a meeting Thursday with the Trade Working Group to discuss the tariffs and provide a further analysis and comment after.
“The biggest question to me that was not answered here was did he just rip up USMCA?” Catherine Karol, a Michigan-based attorney specializing in automotive legal issues at Detroit's Butzel law firm told the Detroit Free Press. “The number of imported vehicles to the U.S. is in the millions, and a large portion of those come from U.S. manufacturing plants in Mexico and Canada.”
Auto industry analyst Joe McCabe provided the Free Press with a list of the automakers who produce vehicles or parts in Mexico and Canada and sell them in the states, all of whom will be impacted by this new tariff. In Mexico, there are: GM, Nissan, Stellantis, Volkswagen, Ford, Toyota, Honda, and Mazda. In Canada, there are: Toyota, Honda, Stellantis, GM and Ford.
McCabe said Trump's latest move did not provide clarity on the impact on parts production.
"Very short comments by the president on parts crossing borders (non-U.S.-built parts), but a lot of the language was about car sales," McCabe told the Free Press in an email.
McCabe who is president of AutoForecast Solutions said Trump is essentially applying a global chicken tax, which is an existing 25% tariff on imported trucks, across all vehicles now. With over 40% of the imported vehicles coming from Canada and Mexico, "we do see some short/mid-term pain" for many automakers.
Trump's order apparently includes all foreign-made cars, bringing Japanese- and European-made cars into a discussion that previously focused on Mexico and Canada.
"It is very black and white when it comes to tracking a vehicle’s VIN," McCabe said. "A lot more difficult if parts will be included. So we are waiting for more clarity on this topic, but we presume it will impact the suppliers, too."
Cox Automotive executive analyst Erin Keating said vehicles impacted specifically from Canada and Mexico will be a lot of the U.S. auto market’s most affordable vehicles — the Ford Maverick, the Toyota RAV4, VW Jetta, Audi Q5 and several Mazda models. Additionally, vehicles like the Chevrolet Trax will also be impacted coming in from Korea.
“Trump did say he would layer these costs on top of existing tariffs. Would those vehicles that already don’t comply with USMCA, already subject to 2.5% tariffs, now be subject to 27.5% tariffs?” she said. “That’s a question I would have for him.”
The history of tariffs this year
On the campaign trail ahead of November's election, Trump repeatedly praised tariffs as a way to rebalance trade, saying that other countries had long taken advantage of the U.S. On Feb. 1, he appeared to follow through with his promise, signing an order to impose 25% on most imports from Canada and Mexico, which, if enacted, threatened Michigan's auto industry.
Analysts estimated that, given a supply chain that sees components and auto assembly often crisscross North American borders almost a dozen times in the making of a single automobile, a new car cost could increase as much as $9,000 if not more, potentially crippling sales. Trump, however, argued that tariffs would not only force manufacturers to bring jobs back to the U.S. but also result in increased revenue for the federal government.
Before those Feb. 1 tariffs went into effect, Trump delayed them for a month until early March. Then, on March 5, just before they again were expected to be put in place, he announced a 30-day reprieve for U.S. automakers under the USMCA free trade agreement he signed into law during his first term. He then paused much of the other import tariffs he had threatened for other products covered by the USMCA.
That gave automakers a chance to try to get Trump and his administration to reconsider altogether, though the president went ahead with plans to hike tariffs on imported aluminum and steel, tariffs on Chinese imports and tariffs on any country that imported oil from Venezuela. He also promised a round of worldwide tariffs to reciprocate against those on U.S. goods from other countries beginning on April 2, a day he began to refer to as "liberation day."
In Michigan, business leaders began to complain that rather than the boon they had hoped for from Trump's election, they were unsettled by an uncertain economic picture and worries about a possible recession. "What we're hearing is it's beginning to look a lot like COVID," Detroit Regional Chamber Sandy Baruah said at a panel discussion this month, referring to the throttled supply lines, upended demand and confusion that came with the pandemic's outbreak five years ago. "Business leaders are struggling with a level of uncertainty they weren’t expecting and weren’t planning for," he said.
The countries importing the most vehicles
On Monday, the Trump White House indicated that sector-specific tariffs might not be part of the April 2 announcement, and Trump said he might have something sooner to say on auto tariffs, though it was unclear at the time if he was talking about those from just Canada and Mexico or those worldwide. "We’ll be announcing that fairly soon. Over the next few days, probably," the president said.
As for countries importing the most cars and light-duty trucks into the U.S. last year in terms of dollar-value, MichAuto, an association that works to promote and expand the industry, said they were Mexico ($50 billion), Japan ($41 billion), South Korea ($38 billion), Canada ($28 billion) and Germany ($25 billion).
But that doesn't necessarily take into account the value of all the various components and preliminary assemblies that move across the U.S. borders with Mexico and Canada as part of the integrated supply chain for vehicles made especially by the Detroit automakers.
Ford Motor Co. CEO Jim Farley, for one, has stated his concern that imposing tariffs unilaterally on Mexico and Canada, where Ford gets a lot of its parts and makes some products, will unduly hurt its bottom line, despite the fact that 80% of its vehicles and all of its trucks are made in the U.S., while having a more limited impact on automakers based in South Korea, Japan and Europe.
Last-ditch efforts
"Let's be real honest: Long term, a 25% tariff across the Mexico and Canada borders would blow a hole in the U.S. industry that we've never seen," Farley said during a Wall Street event last month. "Frankly, it gives free rein to South Korean, Japanese and European companies that are bringing 1.5 million to 2 million vehicles into the U.S. that wouldn't be subject to those Mexican and Canadian tariffs. It would be one of the biggest windfalls for those companies ever."
In an 11th-hour appeal to the White House this week, executives at Detroit automakers General Motors and Ford Motor Co. were either traveling to Washington, D.C. or meeting remotely with Trump administration officials to discuss the dire consequences tariffs could have on their companies. The Free Press learned earlier Wednesday that Ford Executive Chair Bill Ford was heading to the nation’s capital for a series of meetings with the administration.
Similarly, GM CEO and Chair Mary Barra was having remote meetings with Trump administration members. Information on both Ford's meetings as well as Barra's was according to four sources familiar with their plans. The people asked not to be named because they are not authorized to share the information publicly.
It was unclear what contact, if any, Stellantis had with the Trump administration ahead of the announcement. Spokespeople for all three automakers declined to comment on the record regarding any effort to soften, delay or deter tariffs.
Detroit automakers had been regularly talking with or meeting in person with either Trump or his administration since earlier this month, the sources said. The meetings were also characterized as challenging for the automakers at times, as they attempted to educate administration officials on a complex manufacturing and supply chain that can be difficult for those outside the industry to understand, according to two of the sources.
Auto executives have also explained how much it would impact their costs to have 25% tariffs in place on Canada and Mexico and that any efforts to relocate significant portions of their manufacturing base to the U.S. would take billions of dollars and years to do. On Wednesday, an analyst with Cox Automotive estimated that tariffs and the volatility they would cause could result in 700,000 fewer vehicles being sold in the U.S. this year.
Contact Todd Spangler: tspangler@freepress.com. Follow him on Twitter@tsspangler.