New US tariffs for the automotive industry go into effect

According to a Reuters calculation, the new “duties will hit some $460 billion-worth of cars and parts every year.” Moreover, the new directive not only concerns vehicles manufactured abroad but also car parts and components, meaning that it will have a severe impact on the industry. While the tariffs on vehicles have gone into effect now, levies on car parts will follow on 3 May.

There are nearly 150 auto parts categories that will be subject to tariffs. That includes engines, transmissions, lithium-ion batteries and other major components. The list could get even longer, “as the White House directed the Commerce Department to establish a process within 90 days for domestic producers to request that other parts imports be targeted,” Reuters reports.

When the White House first announced the tariffs in March, it said that  “President Trump is taking action to end unfair trade practices that jeopardize US national security.” 

The consequences: Reuters says that Stellantis, for example, has shut down a plant in Canada for two weeks due to the new tariffs. And Volkswagen will add an ‘import fee’ for its cars and has halted imports from Mexico for now. The carmaker said a few weeks ago that it activated an emergency plan and is looking to adjust its production in Mexico. VW operates a large plant in Puebla, where it also produces models for the US market. Other US models are manufactured directly in the US at the VW plant in Chattanooga. However, it still uses components from Mexico, which are now also subject to customs duties.

As reported earlier, prices of foreign-made cars could increase by as much as 11,000 dollars. However, as NBC News reported earlier this week, Trump says he ‘couldn’t care less’ if carmakers would have to raise prices to compensate for paying the new tariffs. For him, the only thing that counts is that ‘people are going to start buying American-made cars,’ adding that if foreign manufacturers did raise prices, it would even help with his goal.

“I couldn’t care less. I hope they raise their prices, because if they do, people are gonna buy American-made cars. We have plenty,” the US President is quoted as saying by NBC News.

Incidentally, Tesla will also be affected by the tariffs. Last week, Trump advisor and Tesla CEO Elon Musk wrote on social media that ‘the tariff impact on Tesla is still significant.’ He later added: “To be clear, this will affect the price of parts in Tesla cars that come from other countries. The cost impact is not trivial.”

On top of tariffs on cars and car parts, the US government US introduced new sweeping tariffs of 10 per cent on most imports to the United States. In addition, higher tariffs are to be imposed depending on the trade deficit. New tariffs of 20 per cent are planned for imports from the EU, and 34 per cent for goods from China. The standard 10 per cent tariffs will come into force on Saturday (5 April). The higher tariffs for the EU and other trading partners will follow Wednesday next week (9 April).

whitehouse.gov, reuters.com (tariffs), reuters.com (video), nbcnews.com, x.com