President Donald Trump claims new levy on all cars and car parts shipped into the country will create "tremendous growth" for the US.
27 Mar 2025 | 2068 Views | By Will Rimell , Autocar UK
A new tariff of 25% will be imposed on all cars and car parts imported into the United State, President Donald Trump has announced.
This new levy will come into effect from April 2, and will apply both to finished machines shipped into the country and car parts imported for ...
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A new tariff of 25% will be imposed on all cars and car parts imported into the United State, President Donald Trump has announced.
This new levy will come into effect from April 2, and will apply both to finished machines shipped into the country and car parts imported for vehicles assembled there.
President Trump claimed the tariffs would lead to "tremendous growth" for the US auto industry, adding that it would create more investment for US-based car makers and therefore more jobs.
Speaking from the Oval Office, Trump said "this is very exciting", adding: “What we’re going to be doing is a 25% tariff for all cars that are not made in the United States.”
Among Indian automakers, US tariffs are considered to be negative for Tata Motors Jaguar Land Rover sales, an equity market analyst said. In nine months of the financial year 2025, North America contributed to 33% of global JLR sales.
“The JLR North America business contributes approx 25% of the consolidated EBITDA. Due to tariffs, for every 10% hit on North America volumes, consolidated EBITDA can be hit by 3-4%,” the analyst said.
Around eight million cars were imported into the US last year, around half the total number of machines sold in the market. Mexico will be the biggest country hit by the new levy. Car makers with production there include BMW, Ford, Nissan, Volkswagen, and Toyota all have plants. The US's other top importers are Canada, Germany, Japan and South Korea
Trump confirmed that the new laws were "permanent", quashing any notion that they would be reversed. But he stated that "if you build your car in the United States, there is no tariff".
The likes of BMW, Mercedes-Benz, and Volkswagen already have plants in the US, building key models for both the US and other global markets. BMW's Spartanburg plant in South Carolina, for example, builds the X3, X4, X5, X6, X7, and XM. It will be hit, however, as it builds and imports the 3 Series from Mexico for the US market.
Some car firms have announced investment to expand or open new US facilities in recent months in an effort to spread production globally and avoid tariffs. The Hyundai Motor Group, for example, have invested more than £16 billion to increase its vehicle production in the country, including a new steel manufacturing plant. The Korean auto major opened the Hyundai Motor Group Metaplant America' plant today. The HMGMA vehicle assembly and battery plant is the key pillar of the Hyundai Motor Group’s $12.6 billion investment in Georgia and will produce up to 500,000 electric and hybrid vehicles annually for the Hyundai, Kia and Genesis brands.
The news will likely come as a big blow to the likes of JLR, which has seen an increase in Range Rover and Defender sales over recent years. Other car makers targetting the US which don't have factories across the Atlantic include Cupra – although its models could be manufactured at other Volkswagen Group brand facilities in the US – and Lotus.
However, the move could also impact domestic US car makers and firms that currently manufacture vehicles there. GM, for example, manufactures a number of vehicles and car parts in Canada, China and Mexico that it then imports into the US, and those machines and parts would be hit by the tariffs.
The announcement has been dubbed "dissapointing" by the Society of Motor Manufacturers and Traders (SMMT).
Mike Hawes, the chief executive of the trade body, called for UK and US representatives to "come together immediately and strike a deal that works for all".
"The UK and US auto industries have a long-standing and productive relationship, with US consumers enjoying vehicles built in Britain by some iconic brands, while thousands of UK motorists buy cars made in America.
"Rather than imposing additional tariffs, we should explore ways in which opportunities for both British and American manufacturers can be created as part of a mutually beneficial relationship, benefitting consumers and creating jobs and growth across the Atlantic."
Ursula von der Leyen, European Commission president, said the bloc will study the latest announcement, adding: "I deeply regret the US decision to impose tariffs on European automotive exports.
"As I have said before, tariffs are taxes - bad for businesses, worse for consumers equally in the US and the European Union.
"The automotive industry is a driver of innovation, competitiveness, and high quality jobs, through deeply integrated supply chains on both sides of the Atlantic.
"The EU will continue to seek negotiated solutions, while safeguarding its economic interests."
This new tariff is the latest in a wave of levies introduced by president Trump since he took office for the second time. He said he wants to protect businesses and manufacturers in America.