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Trump announces 25% auto tariffs to take effect April 2

Published: 27 Mar. 2025, 08:52 Updated: 27 Mar. 2025, 13:31

SARAH CHEA
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U.S. President Donald Trump speaks in the Roosevelt Room at the White House in Washington on March 24 after Hyundai Motor Group announced a $21 billion investment in the United States. [EPA/YONHAP]

U.S. President Donald Trump said Wednesday that his administration will start imposing 25 percent tariffs on all imported cars early next month, a new levy likely to affect Korea's automotive industry.

Trump signed a proclamation to impose the new tariffs on foreign-made cars, light trucks and key parts, such as engines, transmissions, powertrain parts and electrical components, starting April 2, as he is using tariffs to strengthen domestic manufacturing and pare down the U.S. trade deficit.

For the auto tariffs, Trump invoked Section 232 of the Trade Expansion Act of 1962, a statute that provides the president with the authority to adjust imports into the United States when he determines they threaten to impair national security.

"What we are going to be doing is a 25 percent tariff on all cars that are not made in the United States," Trump said, calling the tariff a "modest" measure and repeating the claim that countries doing business in the United States have "taken so much out of our country, friend and foe."

"If they are made in the U.S., [there is] absolutely no tariff," he added.

The auto tariffs are in addition to duties already in place, an aide to Trump said, noting the new levies will result in over $100 billion of new annual revenue to the United States.

Importers of automobiles under the U.S.-Mexico-Canada Agreement (USMCA), a free trade pact, will be given the opportunity to certify their U.S. content and systems will be implemented such that the 25 percent tariff will only apply to the value of their non-U.S. content, the White House said.

"USMCA-compliant automobile parts will remain tariff-free until the secretary of commerce, in consultation with U.S. Customs and Border Protection, establishes a process to apply tariffs to their non-U.S. content," the presidential office said in a fact sheet.

The Trump administration is also trying to allow people buying a U.S.-made car with a loan to deduct interest payments for income tax purposes, the president said.

The imposition of auto tariffs on April 2 is set to coincide with Trump's announcement on reciprocal tariffs meant to match what other countries levy on U.S. exports. The reciprocal duties are to be customized based on trading partners' tariff and nontariff barriers, as well as other factors, including exchange rates.

The president said reciprocal tariffs will be imposed on "all countries" rather than focusing on specific countries.

"We are going to make it all countries, and we're going to make it very lenient," he said. "I think people are going to be very surprised. It'll be, in many cases, less than the tariff that they've been charging us for decades."

Korean businesses have been closely watching Trump's tariff announcements as they are trying to minimize the potential impact of the planned U.S. levies.

The United States is a top auto export market for Korea — of the total car exports last year, shipments to the United States were tallied at $34.7 billion, or 49.1 percent. Hyundai Motor Group and GM Korea exported around 970,000 and 410,000 units to the United States, respectively, last year.

No U.S. tariffs have been imposed on Korean cars since 2016 under a bilateral free trade agreement.

Amid growing tariff pressure, Hyundai Motor on Monday announced its plan to invest $21 billion in the United States through 2028. The plan consists of an investment of $8.6 billion for the automotive sector, $6.1 billion for the steel industry, component parts and logistics and $6.3 billion for future industry sectors and energy.

The Trump administration is seeking to impose new tariffs as it has received comments from various U.S. industry groups.

Business groups in the U.S. have taken issue with various Korea-related trade issues, including Korea's aged-based beef import restrictions, its online platform regulatory moves and the "screen quota system" mandating that local theaters fill part of their screening time with Korean-produced flicks.

Yonhap

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