President Trump Hits Foreign Cars With 25% Tariffs

On Wednesday, President Donald Trump announced a 25% tariff on all foreign-made cars, set to take effect on 2 April, with collections beginning the following day.

Trump noted:

“All cars that are not made in the United States [will be taxed].”

He emphasized that domestically produced vehicles would remain unaffected, stating that there would be “absolutely no tariff” on them.

The president formalised the decision through a presidential proclamation signed in the Oval Office.

Will Scharf, a longtime aide, confirmed that the new rule also applies to foreign-made light trucks and is in addition to existing duties.

Scharf projected the move would generate over $100 billion in new annual revenue for the US.

Trump Tightens Auto Parts Regulations, Increasing Supply Chain Pressure

Trump’s recent announcement of a 25% tariff on foreign-made cars, raised many questions about its implementation, particularly given the global nature of modern car manufacturing.

With vehicles assembled from thousands of parts sourced from various countries, Trump stated that the government would launch “very strong policing” to track which components trigger the tariffs.

This ambitious task would require federal agents to monitor the origin of each part, a daunting challenge in a system where even a single vehicle can include components from 20 different nations.

The move quickly faced backlash, especially from Europe.

European Commission President Ursula von der Leyen vowed that the European Union would continue negotiations but would not accept this new approach without resistance.

She said in a formal statement Wednesday:

“Tariffs are taxes — bad for businesses, worse for consumers equally in the US and the European Union.”

Meanwhile, the stock market responded with notable drops—shares of General Motors, Ford, and Stellantis each fell by about 5% in after-hours trading.

All three companies, while assembling many vehicles in the US, also have manufacturing facilities outside the country.

In an effort to cushion the blow, Trump offered GM, Ford, and Stellantis a one-month exemption from the tariff on imports from Mexico and Canada—provided their vehicles meet the criteria outlined in the new US-Mexico-Canada Agreement (USMCA).

This exemption, however, will expire at the end of April.

Trump’s tariff announcement did not come as a surprise.

He had flagged the move earlier in the week, explaining it was part of his “reciprocal tariff” policy targeting countries with high duties on US goods while maintaining low barriers to their own markets.

However, business leaders expressed frustration, noting the unpredictability of Trump’s trade decisions, which have made long-term planning increasingly difficult.

Even those supporting American manufacturing are uncertain how to prepare for the rapidly shifting landscape.

Musk Omitted from Decision, Tesla Parts Continue to Face Vulnerabilities

Elon Musk had no role in Trump’s decision to impose a 25% tariff on foreign-made cars—a point the former president made clear, stating Musk “may have a conflict” and has “never asked me for a favor in business whatsoever.”

While Musk serves as Trump’s top advisor on federal operations and leads the Department of Government Efficiency (D.O.G.E)—tasked with cutting spending and reducing bureaucracy—he had no input on the auto tariffs, according to Trump.

That has not kept Tesla out of the spotlight.

Earlier this month, Trump transformed the White House’s South Lawn into an impromptu Tesla showroom, ordering five of the company’s vehicles for display.

He later praised their designs as “beautiful” and even hinted at buying one himself to “support Elon.”

When asked whether Tesla would benefit from the tariffs, Trump suggested the impact would be “net neutral or they may be good,” emphasizing Tesla’s US factories in Fremont, California, and Austin, Texas.

However, Tesla—like most automakers—relies on a global supply chain.

In a letter to the US Trade Representative, the company warned that some components remain “difficult or impossible to source within the United States,” even with aggressive localisation efforts.

Key parts, including suspension systems, brake assemblies, circuit boards, and glass panels, still come from Canada, Mexico, and China.

While the tariffs do not specifically target Tesla, any imported part could face new taxes, and Trump’s promised “strong policing” means heightened border scrutiny—even if final assembly takes place in the US.

Beyond Tesla, the broader electric vehicle industry faces mounting pressures.

More automakers than ever are entering the EV market, challenging Tesla’s dominance.

Yet, some players remain shut out entirely—most notably BYD, China’s largest EV manufacturer, which has yet to gain access to the US market.

With Trump tightening trade policies, that is unlikely to change anytime soon.