Mr. Trump imposes 25% import tax on all cars entering the US

The new tax will take effect April 2. “We will start collecting it April 3,” he said in the Oval Office.

White House Press Secretary Will Scharf explained that the new tax would apply to "all foreign-made cars and light trucks." This tax would add more than $100 billion to the US budget each year.

Still, import tariffs could add thousands of dollars to the price of cars for consumers, driving down sales and costing jobs, according to the Center for Automotive Research. The U.S. auto industry is heavily dependent on imported parts.

In 2024, the US imported $474 billion worth of auto-related products, including $220 billion worth of passenger cars. Mexico, Japan, South Korea, Canada and Germany - all close US allies - are major suppliers to the country.

Shares of US-listed automakers fell on the news. Investors feared the import tariffs would cause a shock to the global auto industry, which has been battered by Mr Trump’s frequently changing tax policies.

Since taking office on January 20, Mr. Trump has announced import tariffs, then postponed them, on Canada and Mexico. Meanwhile, China has been subject to an additional 20% tax. All aluminum and steel imported into the US are subject to a 25% tax.

April 2 is also the day Trump plans to announce reciprocal import tariffs on US trading partners. However, he said the tariffs could be milder. "I think people are going to be very surprised. In many cases, the import tariffs they're paying are lower than they've been charging the United States for decades," the US President declared.