Updated March 26, 2025

05:49 PM EDT

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Key Takeaways

  • President Donald Trump announced a new import tax on foreign-made cars in an escalation of his tariff-based trade policies that have shaken up the economy in recent weeks.
  • The 25% tariff will apply to all cars made outside of the United States and will go into effect April 2.
  • The auto tariffs are the latest salvo Trump’s trade war, which has also raised import taxes on aluminum and steel and products from Canada and Mexico.

President Donald Trump announced a new import tax on foreign-made cars in an escalation of his tariff-based trade policies that have shaken up the economy in recent weeks.

The 25% tariff will apply to all cars made outside of the United States, will go into effect April 2, and would be permanent, Trump said in a press conference in the Oval Office Wednesday.

“We’re going to charge countries for doing business in our country and taking our jobs, taking our wealth, taking a lot of things that they’ve been taking over the years,” Trump said.

The tariffs are likely to push up prices for the products targeted, since merchants usually pass import taxes on to consumers, economists have warned. Depending on how they are implemented, tariffs could push the average cost of a new car up by as much as $10,000, according to an analysis by Anderson Economic Group, CBS reported.

The auto levies accelerate Trump’s ongoing campaign of raising tariffs against U.S. trading partners. The tariffs and uncertainty over their details have tanked consumer confidence, stoked fears of a recession and high inflation, and sent financial markets into turmoil in recent weeks. Trump has said he will announce more tariffs on April 2, when he plans to raise U.S. tariffs to match import taxes charged by foreign countries on U.S. products.

Trump has said the tariffs are aimed at bolstering U.S. manufacturing by shielding domestic industry from foreign competition.

Update, March 26, 2025: This story has been updated after publication to include additional information from Trump’s remarks at the Oval Office.

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