Auto industry tariffs: Trump slaps 25% tax on imported vehicles

Trump announces 25% tariff on imported cars

President Donald Trump announced a 25% tariff on all foreign auto imports on Wednesday, saying it would boost domestic production and raise tax revenue. Experts say it will raise the cost of buying a car or truck.

(FOX 2) - President Donald Trump announced a new round of tariffs Wednesday, this time targeting the auto industry.

Trump said he would sign an executive order implementing a 25% tariff on all vehicles built outside of the U.S. The tariffs would be in addition to other tariffs already implemented on the same products.

What we know:

Trump unveiled new tariffs on auto imports Wednesday, speaking from the Oval Office as he signed an executive order that would mandate a 25% tariff on foreign autos.

The president said the tariffs would promote domestic manufacturing of automobiles by incentivizing companies to build their vehicles in the U.S.

"We'll effectively be charging a 25% tariff," he said. "But if you build your car in the United States there is no tariff and what that means is a lot of foreign car companies will be in great shape."

An advisor who handed Trump the order for signing said it would lead to $100 billion in tariff revenue. Trump added the tariff would be "permanent" and would go into effect on April 2.

The tariffs would pertain to all parts or complete vehicles that are being imported into the country.

Whitmer and Ford warn of tariff's impact on Michigan

As a 25% tariff is levied on imports of steel and aluminum, Michigan Governor Gretchen Whitmer and leaders from Ford are warnig about how it could affect the state's economy.

What they're saying:

At least one group that represents foreign auto companies said the tariff would cause the price of vehicles to rise for consumers.

"At a time when cost is the number one concern for American car buyers, U.S. automakers are working to provide a range of affordable vehicles for consumers," said Autos Drive America CEO Jennifer Safavian. "The tariffs imposed today will make it more expensive to produce and sell cars in the United States, ultimately leading to higher prices, fewer options for consumers, and fewer manufacturing jobs in the U.S."

Big picture view:

Auto manufacturers like Ford and General Motors are some of the biggest employers in Michigan and represent a massive share of the American market.

In February, Ford CEO Jim Farley told investors during a conference that tariffs would "blow a hole" in the U.S. auto industry.

American car companies rely heavily on auto imports from Canada and Mexico and tariffs on both countries could raise the cost of materials and supplies, which could push the increase onto the consumer.

According to the Associated Press, the tariffs would disrupt "more than $300 billion in annual U.S. automotive trade" with both countries, posing an existential threat to the production.

Kelley Blue Book, which tracks the selling price of cars and trucks, said consumers may pay as much as $10,000 more for a full-sized truck, while about $3,000 for an average new car.

The pain would intensify if Canada and Mexico added their own tariffs, the AP said.

What we don't know:

While the tariffs will bring in revenue based on the tax of imported vehicles, experts believe the price will rise higher for consumers who need to purchase a new vehicle.

The president has previously announced tariffs of 25% on steel and aluminum imports from Canada and Mexico, as well as 10% tariffs on imports from China.