US President Donald Trump
President Donald Trump has imposed 25 percent tariffs on car imports into the United States, escalating the ongoing global trade war and causing significant declines in Asian auto stocks.
Trump’s new duties, set to take effect on April 3, will apply to cars and light trucks and are part of a broader effort by his administration to address the US trade deficit, coming on top of tariffs already imposed on steel and aluminum, and on goods from Mexico, Canada and China.
The tariff announcement, however, triggered criticism and threats of retaliation from US allies, including Mexico, Japan, South Korea, Canada, and Germany, which are key suppliers of automotive products to the US.
The tariffs are expected to significantly impact the automotive industry, with the US importing $474 billion in automotive products in 2024, including $220 billion worth of passenger cars.
European Commission President Ursula von der Leyen slammed the tariffs as "bad for businesses, worse for consumers”, while new Canadian Prime Minister Mark Carney expressed strong opposition, calling them a “direct attack” on Canadian workers.
“We will defend our workers, we will defend our companies, we will defend our country, and we will defend it together,” Carney told reporters in Ottawa, signaling the potential for retaliatory measures.
Carney had previously unveiled a CA$2 billion ($1.4 billion) “strategic response fund” aimed at safeguarding Canadian auto jobs impacted by Trump's tariffs.
In Asia, automakers like Toyota and Mazda saw sharp declines in stock prices, particularly in Japan, where autos represent over a quarter of exports to the US. South Korea and India also witnessed drops in the stock values of their automakers and parts suppliers.
Global reactions to the tariffs continued to grow, with Brazilian President Luiz Inácio Lula da Silva warning that Trump's “protectionist” measures could harm the US economy.
“Protectionism doesn't help any country in the world,” Lula said on Thursday at a press conference in Tokyo, vowing to file a complaint with the World Trade Organization over a trade levy on Brazilian steel.
Trump’s administration views tariffs as a means to raise revenue and revive the US industrial base, though many trade experts predict that the tariffs will raise prices and reduce demand, further destabilizing an already uncertain global automotive market.
Trump, who has said in multiple occasions that tariff “is the most beautiful word in the dictionary”, also threatened to impose even larger tariffs on the European Union and Canada if they retaliated, highlighting his confrontational stance on trade negotiations.
“We’re going to charge countries for doing business in our country and taking our jobs, taking our wealth, taking a lot of the things that they've been taking over the years. They've taken so much out of our country, friend and foe and frankly, friend has been oftentimes much worse than foe,” the American president said at the Oval Office on Wednesday.
The new tariffs could lead to higher prices for US consumers, fewer vehicle options, and job losses in the automotive industry, as the US relies heavily on imported parts.
Critics say that the move will hurt both consumers and the economy, while labor unions, such as the United Auto Workers, supported the decision as a step forward for American workers.
This is while the automotive industry is concerned about the impact on US automakers who are highly integrated with suppliers in Canada and Mexico, with analysts fearing that Trump’s global trade shake-up could prolong uncertainty and introduce more radical changes to the international trade landscape.
