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Trump announces 25% tariffs on car imports to US Trump announces 25% tariffs on car imports to US
(32 minutes later)
Watch: Trump announces 25% tariff on cars 'not made in the United States'Watch: Trump announces 25% tariff on cars 'not made in the United States'
US President Donald Trump has announced new import taxes of 25% on cars and car parts coming into the US in a move that threatens to widen the global trade war. President Donald Trump has announced new import taxes of 25% on cars and car parts coming into the US.
Trump said the latest tariffs would come into effect on 2 April, with charges on businesses importing vehicles starting the next day. Charges on parts are set to start in May or later. Trump said the latest tariffs would come into effect on 2 April, with charges on businesses importing vehicles starting the next day. Taxes on parts are set to start in May or later.
The president claimed the measure would lead to "tremendous growth" for the car industry, promising it would spur jobs and investment in the US. The president said the measure would lead to "tremendous growth" for the industry, promising it would spur jobs and investment in the US.
But analysts have said the move is likely to lead to the temporary shutdown of significant car production in the US, increase prices, and strain relations with allies.But analysts have said the move is likely to lead to the temporary shutdown of significant car production in the US, increase prices, and strain relations with allies.
The US imported roughly eight million cars last year, accounting for about $240bn (£186bn) in trade and roughly half of overall sales. Trump's latest move threatens to upend global car trade and supply chains.
Mexico is the top foreign supplier of cars to the US, followed by South Korea, Japan, Canada and Germany. Trump's latest move threatens to upend global car trade and supply chains. The US imported about eight million cars last year - accounting for about $240bn (£186bn) in trade and roughly half of overall sales.
Many US car companies have operations in Mexico and Canada as well, set up under the terms of the longstanding free trade agreement between the three countries. Mexico is the top supplier of cars to the US, followed by South Korea, Japan, Canada and Germany.
The White House said the order would apply not only to finished cars but also to car parts, which are often shipped in from other countries before getting assembled in the US. Many US car companies have operations in Mexico and Canada as well, set up under the terms of the longstanding free trade agreement between them.
The White House said the order would apply not only to finished cars but also to car parts, which are often shipped in from other countries before assembly.
However, the new tariffs on parts from Canada and Mexico are exempt while US customs and border patrol set up a system to assess the duties, the White House said. The neighbouring countries see goods worth billions cross borders each day.However, the new tariffs on parts from Canada and Mexico are exempt while US customs and border patrol set up a system to assess the duties, the White House said. The neighbouring countries see goods worth billions cross borders each day.
On Wednesday, shares in General Motors slid roughly 3%. The sell-off spread to other companies, including Ford, after the president's remarks as he confirmed the tariffs. On Wednesday, shares in General Motors slid roughly 3%. The sell-off spread to other companies, including Ford, after the president confirmed the tariffs.
Asked at a press conference if there was any chance he would reverse course, Trump said no, adding later: "This is permanent." Tariffs are taxes charged on goods imported from other countries.
"If you build your car in the United States there is no tariff," he said. The companies that bring the foreign goods into the country pay the tax to the government. Firms may choose to pass on some or all of the cost of tariffs to customers.
Japanese Prime Minister Shigeru Ishiba said his government would put "all options on the table" in response to the tariffs. Trump's plan for car tariffs is his latest in his wider drive to protect American businesses and boost manufacturing within the US.
Japan, which is home to several major motor industry giants, is the world's second largest exporter of cars. But while the measures can protect domestic businesses, they also raise costs for businesses reliant on parts from abroad.
Analysts have estimated that the cost of a car made using parts from Mexico and Canada alone could add $4,000-$10,000 to its cost depending on the vehicle, according to the Anderson Economic Group.
Trump told reporters the tariffs would be "permanent" and reiterated his reasoning that: "If you build your car in the United States there is no tariff."
The prime minister of Japan, the world's second largest exporter of cars, said it would put "all options on the table" in response to the tariffs.
Shares in Japanese carmakers - including Toyota, Nissan, Honda - fell in early trade in Tokyo.Shares in Japanese carmakers - including Toyota, Nissan, Honda - fell in early trade in Tokyo.
A tariff is a tax on imports collected by a government and it is paid by the company importing the good.
Trump has embraced the tool, looking to apply it to a host of goods being imported into the US as part of a wider drive to protect American businesses and boost manufacturing.
But while the measures can protect domestic businesses, they also raise costs for businesses reliant on parts from abroad, as is the case for car-makers.
Analysts have estimated that the cost of a car could rise thousands of dollars, with 25% tariffs on parts from Mexico and Canada alone adding $4,000-$10,000 in cost depending on the vehicle, according to the Anderson Economic Group.
'Direct attack''Direct attack'
The fresh car import taxes on cars are set to come into force on the same day as so-called reciprocal tariffs kick in for individual countries based on their trading relationship with the US. These new tariffs are expected to come in on the same day as other countries are set to impose penalties on the US in retaliation against previously announced taxes.
It is not clear how the car tariffs might affect those plans.It is not clear how the car tariffs might affect those plans.
But many countries, including the UK, are concerned about their exporters being hit as a result of the new taxes. The US was the top sales market for British-based Jaguar Land Rover last year, exceeding sales in the UK and China.
The US was the top sales market for British-based Jaguar Land Rover last year, with the carmaker selling 116,294 vehicles to Americans, exceeding sales to customers in the UK and China. The UK government remains hopeful of a US trade deal before tariffs come into force, the BBC understands.
The UK government is in talks with the US administration and remains hopeful of a trade deal before tariffs come into force, the BBC understands. For the UK, the US is the second largest car export market after the EU, according to the Society of Motor Manufacturers and Traders (SMMT).
Its chief executive Mike Hawes urged the UK and US governments to "come together immediately and strike a deal that works for all".
Watch: Automobile tariffs a 'direct attack', says Canadian PM Mark CarneyWatch: Automobile tariffs a 'direct attack', says Canadian PM Mark Carney
Canadian Prime Minister Mark Carney called Trump's announcement a "direct attack" on his country and its car industry.Canadian Prime Minister Mark Carney called Trump's announcement a "direct attack" on his country and its car industry.
"This will hurt us, but through this period by being together we will emerge stronger," he said.
European Commission president Ursula von der Leyen said the bloc would consider the measures before any potential response.European Commission president Ursula von der Leyen said the bloc would consider the measures before any potential response.
"As I have said before, tariffs are taxes – bad for businesses, worse for consumers equally in the US and the European Union," she said.
"The EU will continue to seek negotiated solutions, while safeguarding its economic interests."
Early on Thursday, Trump threatened "far larger" tariffs if the European Union and Canada worked together to do what he described as "economic harm" to the US.Early on Thursday, Trump threatened "far larger" tariffs if the European Union and Canada worked together to do what he described as "economic harm" to the US.
For the UK, the US is the second largest car export market after the EU, with mainly luxury cars shipped across the Atlantic, according to the industry body, the Society of Motor Manufacturers and Traders (SMMT). The car industry was already grappling with the expanded tariffs on steel and aluminium.
Mike Hawes, the chief executive of the SMMT, urged the UK and US governments to "come together immediately and strike a deal that works for all". Ford and General Motors among other major car firms have urged Trump to exempt the industry from any further duties.
The car industry was already grappling with expanded tariffs on steel and aluminium that Trump put in place earlier this month. German automakers said the tariffs send "a fatal signal" for free trade, with the EU car industry body warning the sector will be "hurt".
In recent weeks, major car companies such as Ford and General Motors had urged the president to exempt the industry from any further duties.
A 2024 study by the US International Trade Commission predicted that a 25% tariff on imports would reduce imports by almost 75%, while increasing average prices in the US by about 5%.A 2024 study by the US International Trade Commission predicted that a 25% tariff on imports would reduce imports by almost 75%, while increasing average prices in the US by about 5%.
But Trump has proceeded with the move, which is a revival of an action he first considered during his first term in the White House. Trump's sweeping tariffs are a revival of an action he initially considered during his first term as president.
White House officials said it wanted to see US workers make more parts, not simply assemble them, and have maintained their action is pushing firms to relocate. White House officials said it wanted US workers make more parts, not simply assemble them, and have maintained their action is pushing firms to relocate.
A day before the latest tariffs, South Korean carmaking giant Hyundai announced it would invest $21bn (£16.3bn) in the US and build a new steel plant in the southern state of Louisiana. A day before the latest tariffs, South Korea's Hyundai announced it would invest $21bn (£16.3bn) in the US and build a new steel plant in Louisiana.
Trump hailed the investment as a "clear demonstration that tariffs very strongly work".Trump hailed the investment as a "clear demonstration that tariffs very strongly work".
United Autoworkers union leader Shawn Fain, who had opposed Trump in the election, praised the president's actions, saying he was "stepping up to end the free trade disaster that has devastated working class communities for decades". United Autoworkers union leader Shawn Fain, who had opposed Trump in the election, said the president was "stepping up to end the free trade disaster that has devastated working class communities for decades".
Elsewhere, the head of trade group the American Automotive Policy Council, Matt Blunt, said: "US Automakers are committed to President Trump's vision of increasing automotive production and jobs in the US." Elsewhere, head of trade group the American Automotive Policy Council, Matt Blunt, said car makers are "committed" to Trump's vision of "increasing automotive production and jobs in the US". But American Automakers said the tariffs must avoid raising prices for customers.