Trump to announce tariffs on automobiles amid rattled markets and a global trade war
Leavitt did not provide details about the auto tariffs. Trump suggested a potential 25% tariff on imported vehicles in February. He has not said whether there could be carve-outs for automobiles covered in the U.S.-Canada-Mexico Agreement, the regional trade deal that Trump negotiated during his first term.
'I will leave that to him to make that announcement later,' Leavitt said of the 4 p.m. EDT press event.
Trump's announcement comes ahead of his long-promised reciprocal tariffs, set to go into effect April 2, whereby the U.S. will respond to any nation's tariffs on U.S. exports with tariffs of the same rate on imports from that country. Trump has called April 2 "liberation day in America."
On Monday, Trump also announced plans to impose a 25% tariff on imports from any country that purchases oil or gasoline from Venezuela, targeting the South American nation for what he called "purposefully and deceitfully" sending criminals into the United States.
The U.S. imported $474 billion worth of automotive products in 2024, including passenger cars worth $220 billion. Mexico, Japan, South Korea, Canada and Germany, all close U.S. allies, were the biggest suppliers.
Industry experts and former U.S. officials expect the administration to rely on an investigation Trump used during his first term as justification for the new levies.
Shares of U.S.-listed automakers fell on news of the press conference. Trump's aggressive use of tariffs in his second term has stoked anxieties on Wall Street and fears among consumers about the potential for increases in prices. Tariffs, which are taxes on imports, are typically passed down from companies to consumers, economists warn.
In a Wednesday morning sales forecast call, Cox Automotive chief economist Jonathan Smoke said massive increases in tariffs would be 'highly disruptive' to North American vehicle production, potentially leading to tighter supply, higher prices and a 'much weaker economy.'
Without carve-outs for automobiles and parts, Smoke said the auto market could be facing the highest effective tariff rate since World War II. Costs to make a vehicle assembled in Canada or Mexico could go up $6,000 or more, he said, while higher costs for parts could increase production costs for U.S.-made vehicles by roughly $3,000.
Smoke said new and used prices would likely increase. Tariffs could also mean fewer affordable options for drivers. With roughly half of the affordable vehicles sold in the U.S. dependent on Mexico or Canada, Smoke said rising costs could eliminate some of those nameplates.
'Storm clouds are forming on the horizon,' Smoke said, adding that disruptions could start as soon as mid-April.
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