Donald Trump’s 25% Tariff Proposal on Car Imports—What It Means for You

On Tuesday, President Trump ramped up his trade war with other nations by threatening to slap 25% tariffs on imported automobiles and levy the same or higher rates on semiconductors and pharmaceuticals.

Since assuming office in January, Trump has threatened, and in some instances actually implemented, a wide variety of tariffs on several of the most important US trading partners, claiming that these measures will aid in combating unfair practices.

Imports of steel and aluminum would be subject to 25% taxes, while all items originating from China would be subject to 10%.

While speaking to reporters at his Florida club, Mar-a-Lago, he said that taxes on the automotive industry will be around 25%, with details to be announced around April 2.

Trump has stated that tariffs on drugs and semiconductors will be 25% or more, and will increase significantly over the next year, when asked about the matter.

He went on to state that he had received calls from large companies that were interested in returning to the US and that he wanted to allow affected businesses some time to do so.

The president further stated that trading partners of Washington may invest in American factories to evade taxes.

They need time to come in, he stated. The United States does not impose tariffs on foreign companies that set up shop here. Further emphasizing that their goal is to offer them a fair shot.

The burden of import taxes is often borne by Americans, not foreign exporters, according to experts.

Domestic production accounts for around half of all automobile sales in the US. About half of all imports originate in Canada and Mexico, with significant contributions also coming from South Korea, Germany, and Japan.

Since many of the US suppliers to the sectors that could be hit by Trump’s tariff threats are based in Asia, the region has responded warily.

Considering the significance of Japan’s auto industry, Yoshimasa Hayashi, the senior government spokesperson in Tokyo, informed reporters that the matter of automobile tariffs has been brought up with the US administration.

He went on to say that Japan will assess the particulars of the measures thoroughly before taking any action.

Even Trump’s accuser, Taiwan, a world leader in semiconductor manufacture, which he claims stole US chip business, was wary.

According to a statement from Taipei’s economic ministry, the exact list of products that could be hit by tariffs is still up in the air, but the government will keep an eye on US policy developments and do everything it can to support Taiwanese businesses.

In an effort to sidestep Trump’s responsibilities, the island’s leadership had earlier pledged to increase investment in the US.

The EU’s reduction of auto tariffs to the level we have is something that Trump has expressed his pleasure with.

“The EU had 10 percent tax on cars and now they have a 2.5 percent tax, which is the exact same as us… If everybody would do that, then we’d all be on the same playing field,” he claimed.

“The EU has been very unfair to us. We have a trade deficit of $350 billion, they don’t buy our cars, they don’t take our farm products, they don’t take almost anything… and we’ll have to straighten that out,” he continued.
Based on figures from the US Department of Commerce, the trade deficit for products with the EU exceeded $235 billion in 2024.

In contrast, data from the European Commission shows that in 2023, the last year for which consolidated figures are available, the US had a services trade surplus of $109 billion with the EU.

On Tuesday, Maros Sefcovic, the European Commissioner for Trade and Economic Security, arrived in Washington. He is scheduled to meet with Howard Lutnick, Trump’s commerce secretary, and Jamieson Greer, the White House trade representative.