"We will impose a 25% tax on all vehicles not manufactured in the US," Reuters quoted Trump as saying at an event at the Department of Labor on March 26.
President Donald Trump sees tariffs as a weapon to help increase budgets, make up for the tax cuts he has promised, and promote the weakening of US industry.
Tax collection will begin on April 3, shortly after he is scheduled to announce a series of counterpart tariffs targeting countries with a large trade deficit with the US on April 2.
This move immediately caused a strong reaction. European Commission President Ursula von der Leyen warned that this is "bad news for businesses, and worse news for consumers".
Canadian Prime Minister Mark Carney even called it a "discrete attack" on workers in the country.
"We will protect workers, protect businesses and protect our country at all costs," Mr. Carney said strongly.
Meanwhile, the American Automobile Workers' Union (UAW) praised the decision. UAW Shawn Fain said it was "the right step to bring jobs to American workers". He called on automakers, from the "Big 3" (Ford, GM, Stellantis) to Volkswagen, to quickly reinvest in the US.
However, the reaction from the financial market was full of negativity. Stock companies plummeted in the after-hours trading session, causing the US stock index to fall sharply.
The legal basis for the above tax increase decision stems from the 2019 national security investigation under Section 232 of the 1962 Trade Act under Mr. Trump. At that time, the report concluded that imported cars caused damage to US security, but Mr. Trump had not taken action.
The decision to impose the tax this time is being implemented hastily to the point that the White House must temporarily exempt imported auto components from tax to avoid production disruption.
Departments that comply with the US-Mexico-Canada Agreement (USMCA) will not be subject to immediate tariffs, but may be subject to tariffs after the US Department of Commerce and Customs complete the process.
Former US Treasury Secretary Brad Setser said that about 4 million cars imported from Canada and Mexico will be subject to a 25% tax rate, causing car prices to increase and affecting sales in the US in the coming time.
He also warned that this car tax rate could violate the USMCA and negatively impact the trade deal with South Korea.
In 2024, the US imported 474 billion USD in auto products, of which 220 billion USD was completely built-up vehicles. The largest suppliers include Mexico, Japan, South Korea, Canada and Germany - all of which are important US allies.
