President Donald Trump has announced new import taxes of 25% on cars and car parts coming into the US.
Trump said the latest tariffs would come into effect on 2 April, with charges on businesses importing vehicles starting the next day. Taxes on parts are set to start in May or later.
The president said the measure would lead to “tremendous growth” for the industry, promising it would spur jobs and investment in the US.
But analysts have said the move is likely to lead to the temporary shutdown of significant car production in the US, increase prices, and strain relations with allies.
Trump’s latest move threatens to upend global car trade and supply chains.
The US imported about eight million cars last year – accounting for about $240bn (ยฃ186bn) in trade and roughly half of overall sales.
Mexico is the top supplier of cars to the US, followed by South Korea, Japan, Canada and Germany.
Many US car companies have operations in Mexico and Canada as well, set up under the terms of the longstanding free trade agreement between them.
The new tariffs on car parts from Canada and Mexico are exempt while US customs and border patrol set up a system to assess the duties, the White House said. The neighbouring countries see goods worth billions cross borders each day.
On Wednesday, shares in General Motors slid roughly 3%, while Stellantis – the owner of Jeep and Chrysler – fell 3.6%.
In a post on X, Elon Musk said Tesla would be affected by the measures. “The tariff impact on Tesla is still significant,” he said.
