U.S. President Trump announced on Wednesday that he would impose a 25% tariff on imported cars and light trucks not made in the United States. The tariff will take effect on April 2 and will be levied on April 3. This move expands Trump's trade war aimed at promoting American manufacturing and paves the way for larger retaliatory tariffs next week.

Trump announces 25% auto tariffs

The White House pointed out that auto tariffs apply not only to complete vehicles, but also to important parts, including engines, transmissions, powertrain components and electrical components, and the scope of application may be expanded in the future. Trump called these tariffs "permanent" measures and stressed that he has no intention of negotiating on exceptions.

The White House said that under the United States-Mexico-Canada Agreement (USMCA) negotiated with Canada and Mexico during Trump's term, if importers can prove that their products contain a certain proportion of American content, the 25% tariff will only apply to the non-American source portion.

The White House added that the new tariffs would be in addition to existing tariffs and were estimated to generate up to $100 billion in additional revenue for the United States each year.

Meanwhile, Trump is preparing to launch reciprocal tariffs on April 2, which may be set based on country. Trump hinted that some trading partners may receive exemptions or exemptions, but he also threatened to impose more tariffs on other industries such as lumber, semiconductors and pharmaceuticals:

This will be America's true Liberation Day, on April 2, and I am very much looking forward to it.

Jennifer Safavian, president of Autos Drive America, a trade group that represents foreign automakers, warned that auto tariffs would raise the cost of making and selling cars in the United States, ultimately leading to higher prices, fewer consumer options and cutting U.S. manufacturing jobs.

The United States imported more than $240 billion worth of cars and light trucks last year, and some analysts say the new tariffs could add thousands of dollars to the price of each new vehicle. One study showed that if tariffs were imposed on Canada, Mexico and China, the production cost of a crossover SUV would increase by about $4,000, while a U.S.-made electric car could cost as much as $12,000 more.

US stocks fell across the board, auto stocks fell sharply

Under the pressure of Trump's tariffs, the four major U.S. stock indexes fell across the board:

• The Dow Jones Industrial Average fell 132.71 points, or 0.31%, to close at 42,454.79.
• The Nasdaq index fell 372.84 points, or 2.04%, to close at 17,899.01.
• The S&P 500 index fell 64.45 points, or 1.12%, to close at 5,712.2.
• The Philadelphia Semiconductor Index fell 152.59 points, or 3.27%, to close at 4,508.74.

Auto stocks became the center of selling pressure, with US auto giant General Motors falling 3.12%, multinational auto giant Stellantis falling 3.55%, and electric car giant Tesla falling 5.58%.

Asian auto stocks also suffered a sharp drop at the opening today. Toyota's share price fell 4% at one point, Honda fell 3.1%, Nissan fell 3.5%, Mazda fell by more than 5% at its lowest point, South Korea's Hyundai Motor fell 3.2% at one point, and Kia fell 2.7%.