President Trump said Wednesday he would impose 25% tariffs on cars and light trucks imported into the US, and would expand the administration’s use of aggressive trade measures to boost domestic manufacturers.
“This will continue to drive growth like you’ve never seen before,” Trump said from his oval office Wednesday afternoon. “We effectively charge 25% tariffs. But when you build a car in the US, there are no tariffs.”
Trump said the new car rates will come into effect on April 2 and the US will begin collecting duties the following day. The president added that he believes new import tariffs will generate revenues of between $600 billion and $1 trillion over the next two years.
“This number will be used to significantly reduce debt,” Trump said. “Essentially, I think it’s going to cut taxes and reduce debt.”
White House secretary Will Scharf, who stood next to Trump during the announcement, offered a more conservative estimate of how much new car rates would be raised, and projected a new revenue of around $100 billion.
Trump also repeated his goal of paying tax-deductible interest on car loans, but noted that such a deduction only applies to vehicles made in the US.
As most taxpayers receive standard deductions, tax deductions are generally only adopted by high-income Americans. It will not affect Low- or middle-income households.
The latest tariff salvo comes after Trump gave US automakers a month’s exemption from the import tariff round that took effect on March 4th earlier this month.
Experts say tariffs are largely import taxes passed on to US consumers, which could reduce spending and attenuate economic growth for households.
Big Three US Automaker Stocks – Ford, General Motors, Stellantis – Everything sank After Trump announced new tariffs. Tesla stocks have been disappointing sales and Consumer misfortune Elon Musk’s CEO of Trump administration’s involvement fell nearly 6% that day and 33% this year.
In a statement Wednesday night, Matt Blunt, chairman of the American Auto Policy Council, the US trade group representing the Big Three, said, “U.S. automakers are committed to President Trump’s vision to increase American automobile production and work, and will continue to work with the administration on durable policies, particularly in order to help Americans. The automotive sector that has become a key success in the President’s USMCA agreement.”
When contacted for comment, Stellantis directed CBS News to an AAPC statement.
Trump has long said tariffs on automobile imports have been the decisive policy of the presidency, betting that the costs incurred by taxes will cause both American and foreign automakers to transfer production to US soil.
Automakers with US plants still rely on Canada, Mexico and other countries for parts and finished vehicles. Experts say that as manufacturing facilities take time to launch, there is a high possibility that domestic car prices will rise in the medium term and car sales will decline.
Car prices may rise
One analysis of Trump’s tariffs estimated that car prices could rise equally For some models, $12,200 Due to new import duties, according to a report from Anderson Economic Group, a Michigan economic consulting firm.
“In the long term, this could drive domestic investment and production. However, in the short term, it is inflationary and assuming domestic producers can make new vehicles a luxurious item by responding with a significant increase in their own prices.
Targeting imported cars could also strain relationships with major US partners, including Canada, Japan, Mexico, Korea, and Europe.
“I deeply regret the US decision to impose tariffs on EU car exports,” said Ursula von der Leyen, president of the European Commission, in a social media post. “Taxes are taxes. It’s bad for businesses and bad for US and EU consumers. The EU continues to seek negotiated solutions while protecting their economic interests.”
Approximately 50% of cars sold in the US are manufactured domestically. Of the imports, about half come from Mexico and Canada, with Japan, Korea and Germany also being major suppliers.
Other groups have expressed support for the new car rates.
“Motorcycle production is the foundation of the country’s manufacturing ecosystem,” said Scott Paul, president of industry trade group Alliance for American Manufacturing, a statement. “Motorcycle production is the foundation of the country’s manufacturing ecosystem,” social media posted in the statement. “We have first seen Asian imports erode by NAFTA in the last 40 years. A 25% tariff on automobile imports is not the only way to promote more auto plants here, but in my view it is necessary.”
Shaun Fein, president of United Autoworkers; The customs said It can strengthen employment growth in the US. “These tariffs will allow thousands of well-paid blue-collar auto jobs to be brought back to working-class communities across the United States within a few months.
With Kathryn Watson
I contributed to this report.
