Washington (AFP) – World powers on Thursday blasted US President Donald Trump’s steep tariffs on imported vehicles and parts, vowing retaliation as a widening trade war intensifies. Major car exporter Germany urged a firm response from the European Union, while Japan said it “will consider all options.” The 25 percent US duties take effect starting 12.01am eastern time (0401 GMT) April 3 and impact foreign-made cars, light trucks, and vehicle parts. Global stock markets plummeted with automakers like Toyota, Hyundai, and Mercedes leading the plunge. In New York, shares in General Motors tumbled, with Ford and Stellantis also declining.
France Finance Minister Eric Lombard said the only solution for the EU is to “raise tariffs on American products in response.” Canadian Prime Minister Mark Carney said he convened a meeting to discuss trade options, while Mexico’s Economy Minister Marcelo Ebrard seeks “preferential treatment” for his country. Trump ramped up his threats, saying on social media that Canada and the EU could face “far larger” tariffs if they worked together “to do economic harm to the USA.” Trump confidant and Tesla boss Elon Musk said his company would not be spared, writing on X that the price for parts “is not trivial.” However, because Tesla builds its cars for the US market domestically, it will in fact emerge relatively unscathed compared to rivals.
The American Automotive Policy Council warned that the tariffs must be implemented in a way that “avoids raising prices for consumers” and preserves the industry’s competitiveness. While Trump invoked emergency economic powers for some earlier tariffs, his auto levies build on a government investigation completed in 2019.
The Center for Automotive Research previously estimated that US tariffs could raise the price of a car by thousands of dollars and weigh on the jobs market. About one in two cars sold in the United States are manufactured in the country. Among imports, about half come from Mexico and Canada, with Japan, South Korea, and Germany also major suppliers. Of the US-made cars, their average domestic content is likely around 40 percent, the White House said.
Canadian Vehicle Manufacturers’ Association president Brian Kingston said levies would bring higher costs for producers and consumers, alongside “a less competitive industry.” In a briefing Wednesday, Trump’s senior counselor Peter Navarro blasted “foreign trade cheaters” who he said turned the US manufacturing sector into a “lower wage assembly operation for foreign parts.” He took aim at Germany and Japan for reserving the construction of higher-value parts to their countries. Since returning to the presidency, Trump has imposed tariffs on imports from major trading partners Canada, Mexico, and China — alongside a 25 percent duty on steel and aluminum. The latest levies add to those already in place for autos.
But the White House said that vehicles entering under the US-Mexico-Canada Agreement (USMCA) can qualify for a lower rate depending on their American content. Similarly, USMCA-compliant auto parts will remain tariff-free as officials establish a process to target their non-US content. Mexican President Claudia Sheinbaum said tariffs were contrary to the North American trade deal, but her country would wait until early April before giving a “comprehensive response.”
Uncertainty over Trump’s trade plans and worries they could trigger a downturn have roiled financial markets, with consumer confidence also slipping. Trump has defended levies as a way to raise government revenue and revitalize US industry. Targeting imported cars could strain ties with Washington’s allies, however. “Imposing 25 percent tariffs on imported cars will have a devastating impact on many of our close trading partners,” said Wendy Cutler, vice president at the Asia Society Policy Institute and a former US trade negotiator. Washington has free trade agreements with some affected parties, “calling into question the value of US commitments” under a trade deal, she added.
Besides automobiles, Trump is eyeing other sector-specific tariffs, including on pharmaceuticals, semiconductors, and lumber. Trump has promised a “Liberation Day” on April 2, when he is set to unveil reciprocal levies, tailored to different trading partners, to address practices that his government deems unfair. White House Press Secretary Karoline Leavitt said these would focus on countries that have been “ripping off the United States,” although Trump noted some numbers would be more conservative than many expected.
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