Trump imposes 25% duty on car imports: what it means for the market
3 April 05:49
The administration of US President Donald Trump is imposing 25% duties on imports of cars and trucks. They will come into force on April 3. This was reported by Komersant ukrainskyi with reference to the BBC.
In addition, 25% duties on auto parts will be introduced, which are to take effect on May 3.
Trump said that more than 80% of cars produced in South Korea are sold in South Korea, and more than 90% of cars sold in Japan are produced in Japan, and that cars produced in the United States account for only a small share in these countries.
“Ford sells very little in other countries. An imbalance that has “destroyed” the US industry. That’s why we will impose a 25% duty on all foreign-made cars starting at midnight,” Trump said.
The White House has ordered the Ministry of Commerce to start the process of adding additional auto parts to the list within 90 days, in particular at the request of American manufacturers.
Currently, the list of spare parts includes dozens of tariff codes. These include engines, transmissions, power units and electrical components, as well as other parts such as brake hoses.
At the same time, for vehicles that comply with the rules of origin of the agreement between the US, Mexico and Canada, importers can pay a 25% duty only on the “non-U.S.” part of the car.
How this will affect prices and consumers
The duties could add several thousand dollars to the cost of a car in the United States, which contradicts Trump’s campaign promise to reduce consumer prices.
Ferrari has announced a price increase of up to 10% on cars sold in the US, and other automakers have also warned that they may also raise prices.
JP Morgan said the tariffs would raise prices for new cars by $4,000 to $5,300.
According to Autoweek, the introduction of a 25% duty could lead to a significant increase in the cost of cars:
- A price increase of $12,000 for some models.
- A minimum price increase of $4,000 even for budget options.
- Limited choice of cars on the market, as manufacturers may reduce deliveries due to increased costs.
According to Cars.com, more than 50% of cars sold in the US in 2023 were imported. Some popular models that may be subject to the new duty include:
- Audi Q5
- Chevrolet Silverado 1500
- Ford Maverick
- Ford Mustang Mach-E
- Ram 1500 and 2500
- VW Jetta, Taos and Tiguan.
Car dealers fear job losses.
Will American automakers benefit from this?
Trump said that the duty would stimulate production in the United States:
- Automakers will build new plants or expand existing ones.
- At the same time, shares of General Motors, Ford, and Stellantis have already fallen after the tariffs were announced.
Jennifer Safavian, president of Autos Drive America, said:
“These tariffs will make it more expensive to produce and sell cars in the United States, resulting in higher prices for consumers and fewer manufacturing jobs.”
American car manufacturers may try to get the decision postponed or revised, but so far, Trump has no plans to change his position.
It is worth noting that Tesla investors hope that the electric car maker will be less affected by the duties due to its predominantly US-based production.
