Trump Announces 25% Tariffs On Foreign Cars

"This is very modest," President Trump stated during the Oval Office signing. "If they are made in the United States, there absolutely is no tariff."​ The tariffs, enacted under Section 232 on national security grounds, are projected to generate $100 billion in additional annual revenue. ​

The tariffs will apply to imported passenger vehicles—including sedans, SUVs, crossovers, minivans, and cargo vans—as well as light trucks which are already subject to a 25% "Chicken Tax." Key automobile components such as engines, transmissions, powertrain parts, and electrical systems are also subject to the new duties. Analysts estimate that the cost of imported vehicles could rise by up to $12,500.

Vehicles imported from Canada and Mexico, which were benefiting from preferential treatment under the United States-Mexico-Canada Agreement (USMCA), will also be subject to the new tariffs. The White House confirmed that USMCA-compliant goods will only be tariffed based on the value of their non-U.S. content. However, USMCA-compliant parts will remain tariff-free until the U.S. Commerce Secretary and Customs and Border Protection establish a process to apply tariffs to their non-U.S. content.​

USMCA Content Rules

Under the USMCA, to qualify for tariff-free access, vehicles must meet stringent content requirements

• Regional Value Content (RVC): At least 75% of a vehicle's content must be sourced from North America
• Labor Value Content (LVC): 40-45% of the vehicle's content must be produced by workers earning at least $16 per hour. ​
• Core Parts Requirement: Certain core components, such as engines and transmissions, must originate from within the USMCA region. ​

The United Auto Workers (UAW) union is thrilled and views the move as a step toward revitalizing domestic manufacturing and correcting trade imbalances.

Ford manufactures approximately 80% of its U.S.-sold vehicles domestically and will likely be much less affected than Hyundai or Audi, which import the majority of its vehicles. In contrast, companies like General Motors, which has a significant manufacturing base in America supplemented by substantial international production operations, will face more complex challenges in balancing its lineup.

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