will they stick? Auto industry braces for chaos as Trump sets 25% tariff on all imports Expect new cars to cost thousands of dollars more as a result of the new tariffs. Jonathan M. Gitlin Mar 27, 2025 10:01 am | 33 Credit: Getty Images Credit: Getty Images Story textSizeSmallStandardLargeWidth *StandardWideLinksStandardOrange* Subscribers only Learn moreYesterday afternoon, once the markets were closed and could no longer react immediately, US President Donald Trump announced that starting on April 2, all imported automobiles and many imported car parts will now be subject to an extra 25 percent tariff. Despite Trump's rhetoric during his election campaign and since taking office, tariffs are paid for by those importing the goods, not the exporters, so we can look forward to most new cars and trucksand their maintenance costsgetting a lot more expensive.During his first term in office, Trump started trade wars with key US trading partners like Canada, the European Union, and China. Upon his return in 2025, more trade wars have been the name of the game. A 25 percent tariff on all imports from Canada and Mexico was threatened and then implemented at the beginning of March, before being partially reversed just two days later. Additionally, a 10 percent tariff on Chinese exports was also levied.Less than two weeks later, a new 25 percent tariff on all steel and aluminum imports also joined the club.Imported cars are a national security threat, apparentlyIn his executive order announcing this latest upcharge on US consumers, Trump repeatedly refers to a report from 2019 from his then-commerce secretary, claiming that "automobiles and certain automobile parts are being imported into the United States in such quantities and under such circumstances as to threaten to impair the national security of the United States."Since that report, the pandemic exposed vulnerabilities in the global supply chain, and because only half of the cars and trucks sold in the US are made domestically, that means tariffs are even more justified, the order claims, existing free trade agreements be damned."This will continue to spur growth like you've never seen before," Trump said during a press conference.The vehicle tariff goes into effect on April 2, with the tariff on car parts"engines and engine parts, transmissions and powertrain parts, and electrical components"coming no later than May 3. There is a partial exemption for vehicles that conform to the US-Mexico-Canada free trade agreement, but only for the percentage of US-made content (so a truck that had 45 percent US parts under USMCA would face a 25 percent tariff on 55 percent of its price).The tariffs are good news for Elon Musk, a key Trump ally who spent hundreds of millions of dollars helping his friend get elected. All of the vehicles Tesla currently sells in the US are made in either California or Texas, although yesterday, Trump denied that Musk had ever "asked me for a favor in business." The Ford Motor Company also has limited exposure, with only 20 percent of its US sales being built elsewhere and then imported.The rest of the industry will not be so lucky. Companies like Toyota and Hyundai have plants in the US, but they import hundreds of thousands of vehicles here each year, and both are looking at financial impacts of billions of dollars as a result. And despite the president's claims that this will help US consumers, that seems unlikely. For example, many of General Motors' and Stellantis' affordable models are built outside the US and shipped here.Analysts expect the price increases to show up in dealerships within a few weeks and said that consumers can expect to pay (as an example) an extra $5,000 on a $40,000 vehicle.Mostly, the reaction has been negative. Mostly.Despite the looming damage to the US auto industry, the tariffs have found at least one friend: the United Auto Workers."We applaud the Trump administration for stepping up to end the free trade disaster that has devastated working class communities for decades. 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 todays actions," said UAW President Shawn Fain.But the reaction has mostly been negative, and from all sides of the political spectrum."At a time when cost is the number one concern for American car buyers, US automakers are working to provide a range of affordable vehicles for consumers," said Jennifer Safavian, president and CEO of Autos Drive America. "The tariffs imposed today will make it more expensive to produce and sell cars in the United States, ultimately leading to higher prices, fewer options for consumers, and fewer manufacturing jobs in the US.""Whether vehicles are USMCA compliant or not, this is a double-edged sword that spells bad news for the price of cars for US consumers," said Will Roberts, head of automotive at Rho Motion. "Manufacturers are now choosing between facing a tariff to import or a significant cost increase to relocate and reorganize production, both of which will undoubtedly be inflationary.""Consumers will likely pay thousands more for a new car due to tariffs, which will also dent some of those sales," said Ryan Young, senior economist at the Competitive Enterprise Institute. "Many families with aging cars will hope their cars can last a little longer or look to the used marketwhich is about to have its own price hikes as demand rises for used cars.""One of the few winners will be DCs restaurant industry, which is about to benefit from a hike in expense-account dinners paid for by lobbyists seeking tariff exemptions for their clients," Young said. "The fact that Trump waited until after markets closed on Wednesday to make the announcement shows that even he knows his tariffs will create more losers than winners. Consumers' and automakers' best hope now is that Trump will walk back the tariffs before they take effect on April 2."Indeed, the stock prices for most automakers have been sliding today as the markets react."By imposing nonstrategic auto tariffs, Donald Trump will increase car prices for Americans and hurt working families," said Katherine Garcia, Sierra Club Clean Transportation for All director. "In order for tariffs to help boost domestic manufacturing, they must be accompanied by innovative investment in the US automotive industry. The Trump administration has offered none of that. Instead, with this action alongside their attacks on clean vehicle standards, theyre making it harder for people to afford cars in general and even harder to buy clean vehicles that don't pollute."Jonathan M. GitlinAutomotive EditorJonathan M. GitlinAutomotive Editor Jonathan is the Automotive Editor at Ars Technica. He has a BSc and PhD in Pharmacology. In 2014 he decided to indulge his lifelong passion for the car by leaving the National Human Genome Research Institute and launching Ars Technica's automotive coverage. He lives in Washington, DC. 33 Comments