President Donald Trump on Wednesday signed an executive order implementing a 25% tariff on all automotive vehicles made outside of the U.S., effective April 2.
"It goes into effect April 2. We start collecting on April 3," Trump said during a press briefing at the White House.
The tariff applies to imported sedans, SUVs, crossovers, minivans, cargo vans and light trucks, as well as some automobile parts, including engines, transmissions, powertrain parts, and electrical components, according to a White House fact sheet.
“If parts are made in America and a car isn't, those parts are not going to be taxed or tariffed, and we will have very strong policing,” Trump said.
The White House fact sheet also noted USMCA-compliant automobile parts will not be tariffed until the country can establish a process to only tariff the non-U.S. content of the parts. However, the official proclamation says the tariff will apply to parts no later than May 3.
"Importers of automobiles under the United States-Mexico-Canada Agreement will be given the opportunity to certify their U.S. content and systems will be implemented such that the 25% tariff will only apply to the value of their non-U.S.content," the fact sheet reads.
Trump previously paused automotive tariffs for car imports compliant with the United States-Mexico-Canada Agreement after conversations with General Motors, Ford and Stellantis, per White House Press Secretary Karoline Leavitt.
Prior to the pause, Trump said the tariff rate, which would also cover semiconductors and pharmaceuticals, would be around 25% and increase over the course of the year.
Automakers and parts suppliers are wary of the possible impact of tariffs on the U.S. auto industry, especially as Mexico and Canada account for a majority of the country’s automotive imports.
An estimated 76% of the roughly 3.5 million vehicles manufactured in Mexico during 2023 were imported into the U.S., according to International Trade Administration data. Meanwhile, Canada exported about 93% of its manufactured vehicles to the U.S. the same year, per the Canadian Vehicle Manufacturers’ Association.
Automakers had been making significant U.S. capacity investments to build flexibility into their production strategies even prior to the Trump administration. Just this month, several more companies have announced new U.S.-based projects.
On Tuesday, Hyundai said it will invest $21 billion into its U.S. operations, including a $5.8 billion steel plant in Louisiana to support vehicle production at facilities in Georgia and Alabama.
Tesla also recently announced plans to invest nearly $200 million into a plant near Houston.
Editor's note: This story was updated with additional information from a White House fact sheet and the official proclamation ordering the tariffs.
