Donald Trump announced plans to impose a 25% tariff on Wednesday, days before the US president announced a wide range of taxes on other products around the world.
“What we’re trying to do is 25% tariffs on all cars not made in the US,” Trump said in his oval office. “We start from a 2.5% base. This is what we are and we go to 25%.”
The announcement sparked a swift denunciation from Mark Carney, the European Union and Canadian Prime Minister, whom Mark Carney, who called it a “direct attack” on Canadian workers. “We protect our workers, protect our companies, protect our country, and we protect it together,” Carney said.
European Commission President Ursula von der Leyen described the move as “bad for businesses, bad for consumers.”
If the EU worked with Canada, Trump later threatened further tariffs.
Writing on his own social media platform, True Social, he said, “large tariffs that are far larger than currently planned will be placed on both sides to protect the best friends each of these countries have ever had!”
Japan’s prime minister, Isba, said his government is considering “appropriate measures” in response to the announcement. “Of course we’ll look at all the options.”
South Korea’s automobile sector will face “severe difficulties” when tariffs are in effect and the government plans to respond by April, Industry Minister Ahn Duk-Geun told an industry official meeting on Thursday.
The tariffs will come into effect next week on April 2nd, Trump claiming that the US will begin collecting them the next day. “This is very exciting,” he says, suggesting that the move will drive economic growth.
In February, Trump came up with the idea of a 25% tariff on imported vehicles, but no other details were provided. On Monday, the president suggested that the automotive industry taxation could come “in the very near future.”
April 2 – The day Trump was called “liberation day” – The president is expected to reveal what is called mutual tariffs.
Trump has long argued that the US has been tricked by its trading partners and tariffs are the best remedy. However, he delayed and deserted his tariff plans several times. His stance is concerned for investors, leading to a rapid sale in the US stock market, and has proven unpopular with both the US and consumers of the company.
Many economists have also raised alarms, warning that the president’s tariff plans will put prices rise at risk across the US. For example, a study by car consultant Anderson Economic Group found that blanket tariffs in Canada and Mexico risk increasing US car prices up to $12,000.
Mexico, Japan, Korea, Canada and Germany are one of the top auto exporters to the US. White House employee Will Scharf argued that tariffs on new cars would bring more than $100 billion in US annual revenue.
Automaker’s stocks fell in trading outside of business hours, with US stock index futures sliding down, indicating stocks are heading towards a lower open on Thursday.
Meanwhile, India’s Tata Motors slides 5%, with Tesla’s largest Indian supplier Sonacomstar down more than 4%, with the automotive sector falling by 1.2% in the world’s third largest automotive market.
South Korean Hyundai Motor’s shares fell more than 4%, while sister automaker Kia Corp fell more than 3% since Trump’s announcement. Hyundai Motor’s stocks are expected to record the biggest drop every day since late October last year. Hyundai, along with affiliate KIA, is the third largest automaker in the world by selling.
Stocks of Toyota, the world’s top selling automaker, fell 3.7% in early trading in Tokyo, with Nissan losing 3.2% and Honda losing 3.1%. In South Korea, Hyundai stocks fell 3.4%.
Tariffs rattle Japan’s automobile industry, a key element of the world’s fourth largest economy. The sector accounts for about a tenth of Japan’s labor force, but vehicles account for about a third of exports to the US last year ($142 billion).
Before Trump’s announcement, Katayama, chairman of the Japan Automobile Manufacturers Association, said that a 25% tariff on automobiles from overseas “will have a negative impact on the US and Japan’s economy overall.”
Despite hopes that Japan will not be targeted, the Tokyo minister has so far failed to persuade US counterparts to grant exemptions on exports of steel and vehicles.
Trump said Wednesday that tariffs could be neutral for Tesla, an electric vehicle company led by Elon Musk. The mask was later posted on X. Tesla said it was not unharmed. “The impact of tariffs on Tesla remains important,” he wrote.
Trump wrote about the true society earlier this month: “There’s no fear, we’ll win everything!!!”, claiming that tariffs are already “pouring money” to the country.
However, a Harris poll conducted for the Guardian found that the majority of Americans were already concerned about the impact their financial impact. 90% of Democrats, 69% of independents and 57% of Republicans reported concerns about tariffs.
Industry groups issued an alarm on Wednesday. “We are pleased to announce that Candace Laing is the president and CEO of the Canadian Chamber of Commerce,” said Candace Laing. “This tax hike puts plants and workers at risk for generations, if not eternal.”
