Trump imposes 25% tariff on car imports into the US.

Media reports on Thursday, March 27,2025, say President Donald Trump has announced 25% tariff on cars and car parts coming into the US.

Trump said the latest tariffs would come into effect on 2 April, with charges on businesses importing vehicles starting the next day.

Taxes on parts are set to start in May or later.

The president said the measure would lead to “tremendous growth” for the industry.

He promised that it would spur jobs and investment in the US.

But analysts have said the move is likely to lead to the temporary shutdown of significant car production in the US.

They also say it would lead to  increased prices, and strain relations with allies.

Trump’s latest move threatens to upend global car trade and supply chains.

The US imported about eight million cars last year – accounting for about $240bn (£186bn) in trade and roughly half of overall sales.

Mexico is the top supplier of cars to the US, followed by South Korea, Japan, Canada and Germany.

Many US car companies have operations in Mexico and Canada as well, set up under the terms of the longstanding free trade agreement between them.

The White House said the order would apply not only to finished cars but also to car parts.

Included in these are the ones which are often shipped in from other countries before assembly.

However, the new tariffs on parts from Canada and Mexico are exempt while US customs and border patrol set up a system to assess the duties, the White House said.

The neighbouring countries see goods worth billions cross borders each day.

On Wednesday, shares in General Motors slid roughly 3%.

The sell-off spread to other companies, including Ford, after the president confirmed the tariffs.

Tariffs are taxes charged on goods imported from other countries.

The companies that bring the foreign goods into the country pay the tax to the government.

According to online media reports, firms may choose to pass on some or all of the cost of tariffs to customers.

Trump’s plan for car tariffs is his latest in his wider drive to protect American businesses and boost manufacturing within the US.

But while the measures can protect domestic businesses, they also raise costs for businesses reliant on parts from abroad.

Analysts have estimated that the cost of a car made using parts from Mexico and Canada alone could add $4,000-$10,000 to its cost depending on the vehicle.

This information was revealed by the Anderson Economic Group.

Trump told reporters the tariffs would be “permanent” and reiterated his reasoning that: “If you build your car in the United States there is no tariff.”

The prime minister of Japan, the world’s second largest exporter of cars, said it would put “all options on the table” in response to the tariffs.

Shares in Japanese carmakers – including Toyota, Nissan, Honda – fell in early trade in Tokyo.

CARNEY SAYS IT IS A DIRECT ATTACK ON HIS COUNTRY

These new tariffs are expected to come in on the same day as other countries are set to impose penalties on the US in retaliation against previously announced taxes.

It is not clear how the car tariffs might affect those plans.

The US was the top sales market for British-based Jaguar Land Rover last year, exceeding sales in the UK and China.

The UK government remains hopeful of a US trade deal before tariffs come into force, the BBC understands.

For the UK, the US is the second largest car export market after the EU.

This is according to the Society of Motor Manufacturers and Traders (SMMT).

Its chief executive Mike Hawes urged the UK and US governments to “come together immediately and strike a deal that works for all”.

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