Trump: 25% auto tariffs to begin on 'Liberation Day'

The measure should benefit not only US-based automakers but also foreign automakers with operations in the US, he added.

The text of the proclamation states that the tariff will go into effect on April 3 at 12:01 a.m., the day after April 2 – which the president had dubbed “Liberation Day.”

The proclamation also noted that vehicles made under USMCA will receive favorable treatment. Only the non-US content of those cars, trucks, and SUVs will face the 25% tariff – an exception aimed at vehicles that cross back and forth across the US, Canadian, and Mexican borders.

The proclamation appeared to hinge on a 2019 report from Trump’s first administration that concluded that both imported automobiles and imported automobile parts “threaten to impair the national security of the United States.”

The president, in addition, signaled that other tariffs would be coming on April 2 – including potential tariffs on pharmaceutical goods and lumber and reciprocal tariffs to counteract what the administration says are barriers to US exports imposed by foreign governments.

“Business is coming back to the United States so that they don’t have to pay tariffs,” Trump said. The president added that companies were also “very happy” because he said his administration had simplified the permitting processes.

“This will continue to spur growth like you haven’t seen,” Trump said. He claimed that companies were already moving plants from Canada and Mexico – with whom the US shares closely interlinked automotive supply chains – back to the States.

“We’re going to charge countries for doing business in our country and taking our jobs, taking our wealth,” Trump said. “They’ve taken so much out of our country. Friend and foe. And, frankly, friend has been oftentimes much worse than foe.”

The move marked the latest escalation in Trump’s trade wars, which have already included the imposition of 25% Section 232 tariffs on imported steel and aluminum, new tariffs totaling 20% on all goods from China, and 25% in threatened tariffs on most goods from Canada and Mexico.

Other measures are new, including a 25% “secondary tariff” on countries that import Venezuelan oil as well as fees on Chinese-made ships docking at US ports.

Reaction

The sprawling nature of the tariffs has sparked concerns about renewed inflation and supply chain disruptions. And they have not provided an immediate boost to demand. Cleveland-Cliffs, for example, plans to idle steelmaking operations at its Dearborn Works in Michigan on “weak” US automotive production.

But the United Auto Workers (UAW) – which endorsed former President Joe Biden – cheered the auto tariffs. “We applaud the Trump administration for stepping up to end the free trade disaster that has devastated working class communities for decades,” UAW President Shawn Fain said in a statement.

“Ending the race to the bottom in the auto industry starts with fixing our broken trade deals, and the Trump administration has made history with today’s actions,” Fain added.