- Trump announced that he will impose 25% tariffs on imported cars and auto parts
- The tariffs will be permanent, but a decision on Mexico and Canada is on hold for now
- Shares of US and Asian automakers experienced declines
Trump announced that he will impose 25% tariffs on imported cars and auto parts, and the tariffs will be permanent, but the decision on Mexico and Canada has been postponed for now. Meanwhile, shares of US and Asian automakers have experienced declines, with industry leaders warning that it will significantly increase the price of cars and reduce choice for US consumers.
More About Donald Trump’s Announcement on the Decision Regarding the 25% Tariffs
The 25% tariff that is expected on April 2 has received updates, and recently, there were reports that the Trump administration will impose more targeted tariffs, and they will not include the automotive sector. But Trump’s latest official statement indicated the initial, wider stance on tariffs and brought us back to 25% on all imported cars and auto parts.
Still, the tariffs under the US-Mexico-Canada Agreement (USMCA) will be handled separately, and their imposition is on hold while the Secretary of Commerce, in consultation with the US Customs and Border Protection (CBP), establishes a process for applying tariffs to their content.
Meanwhile, stocks of US and non-U.S. automakers showed declines following the announcement, notably:
Japan’s Nissan, Toyota and Honda closed down 2.2%, 2.7% and 3%, respectively.
In South Korea, Hyundai Motor and Kia fell about 4%.
US General Motors was down more than 7%, Ford was down 4.6%, and Stellantis was down 4%.
Even though Donald Trump’s statements that “If you build your car in the US, there’s no tariff” should have spurred the US auto industry, not the other way around – he is not abandoning his rather unambiguous strategy and says that tariffs will be “permanent.”
Conclusion
All of this is an inevitable market reaction and a cost that will have to be made in order for Trump’s long-term strategy to bear fruit, if any. Moreover, this cost will have to be paid not only by individual sectors but also by entire industries, as everything is interconnected. For example, energy tariffs could seriously impact energy-intensive areas such as blockchain and artificial intelligence.
We can only hope that these risks, which, by the way, the EU is currently considering, will be justified and that US will have the strength reserve it needs to get through this transition period.
Stay tuned for updates, be adaptive in the rapidly evolving financial and crypto landscape, and keep your strategy grounded, balanced, and beneficial.
