In a move set to intensify global trade tensions, US President Donald Trump has announced a 25% tariff on imported cars and auto parts. 

The new levies, aimed at bolstering domestic manufacturing, are scheduled to take effect on April 2 for vehicle imports, while tariffs on parts will follow in May or later.

Trump asserts that this policy will drive substantial growth in the US automotive sector, creating jobs and attracting investment. 

However, industry experts warn that the tariffs may disrupt production, elevate car prices, and strain relations with key trade partners.

The US imports approximately eight million vehicles annually, amounting to $240 billion in trade. Mexico leads as the largest foreign car supplier, followed by South Korea, Japan, Canada, and Germany. 

With many American automakers operating factories in Mexico and Canada under existing free trade agreements, the new tariffs could significantly impact supply chains.

While the tariffs apply to both finished vehicles and parts, imports from Canada and Mexico are temporarily exempt as the US Customs and Border Protection develops a duty-assessment system. 

Nevertheless, the neighboring nations, through which billions in goods pass daily, view the move as a serious economic threat.

Following the announcement, General Motors' stock dropped by 3%, with other automakers, including Ford, experiencing similar declines. 

When asked if he might reconsider the policy, Trump firmly responded, “This is permanent,” emphasizing that vehicles manufactured in the US would not be affected.

The decision has sparked international criticism. Japanese Prime Minister Shigeru Ishiba vowed to explore all possible responses, while European Commission President Ursula von der Leyen warned that tariffs would harm businesses and consumers on both sides of the Atlantic. Canadian Prime Minister Mark Carney condemned the action as a "direct attack" on his country's auto industry.

Despite industry opposition, Trump remains resolute, citing Hyundai’s recent $21 billion investment in the US as proof that tariffs work. 

Meanwhile, labor leaders and domestic manufacturers express cautious support, hoping the policy will boost American automotive jobs.

Source: BBC

BDST: 1152 HRS, MAR 27, 2025
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