Trump plans to impose 25% tariff on imported automobiles on April 2

U.S. President Donald Trump on Wednesday announced plans to impose 25-percent tariffs on all imported automobiles, with the measures set to take effect on April 2.

"What we're going to be doing is a 25 percent tariff for all cars that are not made in the United States," Trump said in the White House Oval Office. "We start off with a 2.5-percent base, which is what we're at, and go to 25 percent."

"We're signing (an executive order) today. It goes into effect April 2. We start collecting on April 3," Trump said.

The U.S. president argued that the tariffs would encourage more production to relocate to the United States, generate new revenue for the government, and help reduce the national debt.

Economists, however, have warned that tariffs would push up car prices, and hurt consumers, who already face elevated prices.

Mexico's Monex Financial Group warned on Wednesday that the tariff could raise production costs for Mexico and Canada, adding pressure to an already strained global auto industry.

In a sectoral analysis, Monex said recent U.S. tariffs on steel and aluminum imports, imposed on March 12, are already disrupting trade flows and supply chains.

Mexico and Canada together accounted for nearly 40 percent of U.S. steel imports in 2023, and also supply about 29 percent of America's imported vehicles, Monex noted.

An additional 25-percent auto tariff would significantly impact pricing and availability. For Mexico, the tariffs could hit exports worth 4.7 percent of its total trade and over 1.5 percent of its GDP, according to the report.

Industry estimates suggest the move could add up to $3,000 to the average cost of a car in the United States, potentially reducing 2025 sales.

Only vehicles meeting the 75-percent regional content rule under the USMCA trade agreement would be exempt.

EU warns tariffs hurt consumers

European Commission President Ursula von der Leyen on Wednesday night warned that tariffs "are bad for businesses, worse for consumers" in both the United States and the European Union.

"The automotive industry is a driver of innovation, competitiveness and high-quality jobs, with deeply integrated supply chains on both sides of the Atlantic," von der Leyen said in a statement.

"We will now assess this announcement, together with other measures the U.S. is envisaging in the coming days," she said, noting the bloc would continue to seek negotiated solutions while protecting its economic interests.

Canada: Looking for possible retaliation

Canadian Prime Minister Mark Carney on Wednesday said his government will be looking at its options for retaliation against the U.S. auto tariffs, local media reported.

While campaigning ahead of upcoming elections, the Liberal leader said the tariffs are "a direct attack" against Canadian workers, regardless of how they are applied, according to CBC News.

"We have anticipated this possibility," he was quoted as saying. "We will take the steps that are in the interests of Canadian workers, of Canada. We're going to stand up for Canada. We're going to be united."

Previously Carney announced a "strategic response fund" which is valued at 2 billion Canadian dollars ($1.4 billion) to bolster the country's auto industry.

Carney said the money would be used to boost the auto sector's competitiveness, protect manufacturing jobs, help workers gain expertise and build "a fortified Canadian supply chain."

Auto parts often cross the border multiple times, and the added costs of tariffs and counter-tariffs would quickly snowball.

Carney called that a "huge vulnerability" and promised to build an "all-in-Canada" manufacturing network to build more car parts domestically, limiting how often they cross the border during production.

"In the new world, that will be an advantage," he was quoted as saying. "That will help insulate us from President Trump's trade threats and it will grow the economy."

If elected on April 28, Carney said his government would also prioritize and procure Canadian-built vehicles, CBC News reported.

UK trade body: U.S. tariffs disappointing

A leading trade association for the British automotive industry said on Wednesday night that Trump's plan to impose new tariffs on imported cars is disappointing.

The announcement "is not surprising but, nevertheless, disappointing if, as seems likely, additional tariffs are to apply to UK-made cars," Mike Hawes, chief executive officer of the Society of Motor Manufacturers and Traders (SMMT), said in a statement.

Noting that the U.S. and British auto industries have a long-standing and productive relationship, Hawes called on both sides to "come together immediately and strike a deal that works for all."

"Rather than imposing additional tariffs, we should explore ways in which opportunities for both British and American manufacturers can be created as part of a mutually beneficial relationship, benefitting consumers and creating jobs and growth across the Atlantic," he said.

The United States is the second-largest market for British carmakers, according to the SMMT.

Japan: All options on table against U.S. tariffs

Japanese Prime Minister Shigeru Ishiba said on Thursday that Japan will consider an appropriate response against U.S. tariffs on imported automobiles, vowing that all options are on the table.

"We are strongly urging the U.S. not to apply the 25-percent tariff to Japan," Ishiba said.

Citing Japan's contributions to the U.S. economy through investment and job creation, Ishiba questioned the fairness of a uniform tariff increase for all countries.

(With input from Xinhua)