Donald Trump imported cars into the United States and has specified what his real motives are. The President of the US has actually called for 25% taxes on all cars not made on American territory. The new tariffs will therefore apply to all nations and not only to some. In the absence of any shocks, it implies that these new taxes will equally apply to automobiles manufactured in Europe.
LIBERATION DAY
It’s the dawn of Liberation Day in America. This is what Donald Trump had to say when he announced new tariffs on cars and more, pointing fingers at countries that do business in the U.S. while taking away American jobs and wealth. The President emphasized that these new tariffs on cars are meant to encourage car manufacturers to invest in the United States, highlighting that several brands have already made the move to invest back in the country. He noted that if a foreign car manufacturer produces vehicles in America, those cars won’t be impacted by the tariffs. For American citizens, Trump mentioned that anyone who buys a car made in the U.S. with financing will be able to deduct the interest from their tax returns. These new tariffs mark a significant escalation in Trump’s trade war and could create substantial ripple effects throughout global auto supply chains. According to Automotive News Europe, some car parts will also face a hefty 25% tariff. Now, we’re left waiting to see what countermeasures and retaliations will come from the affected countries.
THE FIRST REACTIONS
One of the first to respond to the new car tariffs was Ursula Von der Leyden, the President of the European Commission, who expressed her disappointment over Trump’s decision. I really regret the decision made by the US to impose tariffs on European automotive exports. The automotive sector is a key player in driving innovation, competitiveness, and creating high-quality jobs, thanks to the deeply integrated supply chains that exist on both sides of the Atlantic. As I’ve mentioned before, tariffs are essentially bad taxes for businesses and even worse for consumers in both the US and the EU. Ursula Von der Leyen also pointed out that the European Union will keep looking for negotiated solutions while protecting its economic interests. Canada and Japan chimed in with negative remarks, calling the implementation of American duties extremely unpleasant. Brazil, on the other hand, made it clear that it won’t just sit back and accept these duties.
WHAT DOES ELON MUSK SAY?
During his speech, Trump once again praised Elon Musk, calling him a patriot. However, it seems that the Tesla CEO might not be too thrilled about the new customs tariffs, as he acknowledged that they will significantly impact his company. To clarify, this will affect the price of Tesla car parts sourced from other countries. The cost implications are not insignificant. — Elon Musk (@elonmusk) March 27, 2025 Indeed, the rising costs of car parts could have serious consequences for American consumers. An analysis by the Anderson Economic Group suggests that this policy could lead to a sharp increase in new car prices. The president’s remarks today indicate that car buyers and auto workers should brace themselves for a shock in less than a month. Tariffs at this level could mean cost hikes of anywhere from $4,000 to $10,000 for most American cars. The analysis warns that this projected price increase could have a dramatic negative impact on U.S. auto sales and lead to job losses in states like Michigan, Ohio, Indiana, Illinois, Missouri, Texas, South Carolina, and Alabama, as well as in Ontario, Canada. Anderson noted that manufacturers will likely look to replace parts and shift production.
