President Donald Trump on Wednesday announced that a 25% tariff would be imposed on automobiles imported into the United States in an effort to bring back manufacturing jobs to the country.
The White House said the tariff would apply to fully assembled cars and key automobile components, including engines, transmissions, powertrain parts, and electrical components. That list could expand over time to encompass additional components. US car and light truck imports were valued last year at more than $240 billion.
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Trump claimed that his new trade measure is “permanent”, will continue to spur growth in tax revenues and bring back manufacturing jobs as tariffs force automakers to reorient supply chains from Canada and Mexico which the US president has termed “ridiculous.”
“The beauty of the 25 (per cent) is it’s one number. And that number is going to be used to reduce debt greatly in the United States. “Basically I view it as reducing taxes and also reducing debt, and within a fairly short period of time I think we’re going to have a balance sheet which will be outstanding,” Trump said.
How did countries react?
Canada: New Prime Minister Mark Carney criticised the US’s trade action and said, “This is a very direct attack. We will defend our workers. We will defend our companies. We will defend our country.”
Ottawa shipped nearly C$50 billion ($35 billion) worth of vehicles into the US market last year, making autos one of its most important exports.
European Commission: President Ursula von der Leyen regretted Trump’s latest tariff escalation and said the bloc would assess the economic impact and other tariffs planned by the US. “Tariffs are taxes — bad for businesses, worse for consumers equally in the U.S. and the European Union,” she said in a statement.
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Other reactions
Ontario: Premier Doug Ford, who once threatened to cut off the province’s electricity export to the US, urged Carney to target American cars. “I can assure you one thing. We’re going to make sure that we inflict as much pain as possible to the American people without inflicting pain on the Canadian population,” Ford said.
UK: The UK’s industry body, the Society of Motor Manufacturers and Traders (SMMT), warned that Trump’s tariffs would hurt both American and British businesses and consumers.
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Mike Hawes, chief executive of SMMT, said the move as “not surprising but, nevertheless, disappointing” and added that it is “a blow to a long-standing and productive relationship.”
Autos Drive America, a lobbying group for non-US carmakers, warned that the new tariff would have the opposite effect. “The tariffs imposed today will make it more expensive to produce and sell cars in the United States, ultimately leading to higher prices, fewer options for consumers and fewer manufacturing jobs in the US,” Jennifer Safavian, the group’s president, said in a statement.
Business leaders of Ford and Jeep have urged the White House to target roughly 4 million vehicles imported to the US annually that are made without domestically manufactured parts content.
(With AP inputs)
