- President Trump has announced a 25% tariff on all vehicles not built in the USA.
- This could raise $100 billion and these costs will likely be passed onto consumers.
- Trump also announced plans to make car interest payments tax deductible.
President Trump is escalating his trade war and millions of people could pay the price as he announced 25% tariffs on all vehicles not made in the United States. This marks a significant escalation as it seemingly applies not just to Canada and Mexico, but globally.
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In a speech today, Trump said the move would spur growth and bring back automotive jobs that have been sent to other countries. He also stated that consumers would have the option to buy gasoline, electric, hybrid, or any other type of vehicle they prefer.
More: Hyundai Investing $21 Billion In The US To Dodge Trump’s Tariffs
Trump went on to say the automotive industry will “flourish like it’s never flourished before.” However, it’s likely that consumers will be getting the short end of the stick as the tariffs are projected to generate $100 billion in new revenue. Despite what the administration says, foreign countries don’t pay that, companies do and they’ll likely pass the added cost onto you, the consumer.
The White House has since released additional information on how the tariffs will be applied. According to an official statement, the 25% tariff will target imported passenger vehicles—including sedans, SUVs, crossovers, minivans, cargo vans, light trucks—and key automobile parts such as engines, transmissions, powertrain parts, and electrical components. The administration also mentioned that processes will be in place to expand tariffs on additional parts if necessary.
The exact details remain to be seen, but we can expect to learn more on April 2. Trump also mentioned that vehicles built in America would face “absolutely no tariff.” However, he implied tariffs could be tied to foreign parts content.
“If parts are made in America and a car isn’t, those parts won’t be taxed or tariffed, and we’ll have very strong policing on that,” said Trump, responding to a question from the press. “For the most part, I think this will lead to cars being made in one location. Right now, a car would be made here, sent to Canada, sent to Mexico, sent all over the place—it’s ridiculous. So, this is a very simple system.”
More: Canada Halts Musk’s $43M Tesla EV Rebate Claim After Rapid-Fire Sales, Bans Future Subsidies
After the press conference, the White House clarified that automakers importing vehicles under the United States-Mexico-Canada Agreement (USMCA) will be given the opportunity to certify their U.S. content. It said that the systems “will be implemented such that the 25% tariff will only apply to the value of their non-U.S. content” in those vehicles. However, vehicles and parts will remain tariff-free until these processes are fully in place.
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While prices could sky rocket as soon as next week, the President reiterated his intention to allow Americans to deduct interest on car loans. This would apply to vehicles made in America, but details are virtually non-existent. However, it was previously believed to work like the mortgage interest deduction.
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