Washington: US President Donald Trump has enacted an executive order imposing a 25 percent tariff on imported automobiles and specific auto parts, effective from April 2. The measure aims to counter "unfair trade practices" and safeguard US national security. "What we're going to be doing is a 25 percent tariff on all cars that are not made in the United States," President Trump stated to reporters following the signing of the order.
According to Kuwait News Agency, the decision is intended to stimulate domestic manufacturing and employment within the US auto industry. The tariffs are structured to incentivize businesses to relocate their operations to the United States, thereby avoiding the additional costs. "Business is coming back to the United States so that they don't have to pay tariffs --. This will continue to spur growth like you haven't seen before," Trump remarked. He emphasized that auto parts manufactured in America would not be subject to the tariff unless the entire vehicle is not made in the US.
The White House emphasized the economic rationale behind the decision in a post on its X account, highlighting a "staggering" trade deficit in automobile parts amounting to USD 93.5 billion in 2024. It further noted the importance of the auto industry to the American workforce, with the sector employing around one million Americans. Despite this, auto parts manufacturing jobs have decreased by 34 percent since 2000, a loss of 286,000 jobs. The White House statement also pointed out the disparity in global research and development (R and D) spending, with US-owned automakers contributing only 16 percent in 2023, compared to 53 percent by the European Union. The administration believes the new tariffs will invigorate American innovation and competitiveness in the global auto industry.