World leaders have strongly criticized US President Donald Trump’s decision to impose a 25% tariff on imported cars and auto parts. The move has sparked fears of a wider trade war, with major exporters like Germany and Japan warning of retaliation.
Germany urged the European Union (EU) to take a firm stand, while Japan said it would “consider all options.” Stock markets in Asia and Europe reacted negatively, with major carmakers such as Toyota, Hyundai, and Mercedes seeing sharp declines.
The new tariffs will take effect on April 3 at 12:01 am (0401 GMT) and will apply to foreign-made cars and light trucks. Key auto parts will also face additional duties later in the month.
“We are placing a 25% tariff on all cars not made in the United States. If they are made in the U.S., there will be no tariff,” Trump said at the White House.
French Finance Minister Eric Lombard condemned the tariffs, calling them an act of “hostility.” He warned that the EU would have no choice but to impose countermeasures on American products.
Canadian Prime Minister Mark Carney announced an emergency meeting to discuss trade responses.
Trump, however, doubled down on his threats. In a post on TruthSocial, he warned that if the EU and Canada took action against the U.S., even larger tariffs would be imposed.
Even U.S. car manufacturers raised concerns. Tesla CEO Elon Musk admitted that his company would be affected.
“To be clear, this will increase the cost of Tesla parts sourced from other countries. The price impact is significant,” Musk posted on X.
The American Automakers Association also warned that the tariffs could raise vehicle prices and hurt industry competitiveness.
The Center for Automotive Research estimated that tariffs on imported vehicles and auto parts could increase car prices by thousands of dollars and lead to job losses.
However, Peter Navarro, Trump’s senior trade advisor, defended the move, accusing foreign manufacturers of “cheating” by keeping high-value production in their own countries while turning the U.S. into a low-wage assembly hub.
Since starting his second term in January, Trump has already imposed new tariffs on Canada, Mexico, and China. He also raised duties on steel and aluminum.
While the tariffs will apply to most foreign cars, vehicles under the USMCA (United States-Mexico-Canada Agreement) may qualify for lower rates based on American-made content. Some auto parts that meet USMCA rules will also remain tariff-free.
Experts have warned that these tariffs could damage trade ties with key partners, including Japan, South Korea, Canada, Mexico, and Germany.
“Placing a 25% tariff on imported cars will severely impact our closest trading partners,” said Wendy Cutler, vice president at the Asia Society Policy Institute. She also questioned the U.S.’s commitment to free trade agreements.
Currently, about half of all cars sold in the U.S. are made domestically. Of those, more than 50% use foreign-made parts. Major exporters to the U.S. include Mexico, Canada, Japan, South Korea, and Germany.
Trump is also considering additional tariffs on other industries, including pharmaceuticals, semiconductors, and lumber.
The auto tariff announcement comes ahead of Trump’s so-called “Liberation Day” on April 2, when he plans to introduce more trade policies aimed at reducing U.S. dependence on foreign goods.
The White House said these new tariffs are based on a 2019 investigation, which found that excessive car imports were weakening the U.S. economy and could pose a national security risk.
As tensions rise, global markets remain on edge, with fears that the trade war could escalate further.
AFP
