Global Automakers Say 25% U.S. Tariffs Will Hurt Them and American Consumers

Whatever economic gains President Donald Trump’s new 25% tax on imported cars may bring, automakers worldwide are bracing for significant challenges, as the tariff translates to an additional $12,000 per imported vehicle, David McHugh, Lorne Cook, Aamer Madhani, and Danica Kirka reported for the Associated Press (AP).

In Japan, South Korea, Mexico, Canada, and across Europe, the world’s largest automakers employ millions of workers whose livelihoods depend on U.S. car buyers.

In Japan, South Korea, Mexico, Canada, and across Europe, the world’s largest automakers employ millions of workers whose livelihoods depend on U.S. car buyers, who currently spend more than $240 billion annually on imported cars and light trucks.

The Trump tariffs—aimed at boosting U.S. jobs and tax revenues—will also affect imported auto parts, which were valued at $197 billion last year.

“The impact will be really huge and very disruptive,” said Sigrid de Vries, director general of the European Automobile Manufacturers’ Association (EAMA). De Vries and other critics argue that American car shoppers will also suffer, as tariffs push prices higher, The Dallas Morning News reported.

U.S. automakers are less exposed to potential retaliation, as they export only 2% of their production to the EU.

Still, shares of Ford and General Motors fell, given that the U.S. auto industry relies heavily on cross-border trade in auto parts.

The blow will not fall evenly. The most exposed among European automakers are German and Italian manufacturers, as 24% of German and 30% of Italian non-EU auto exports go to the U.S. Japan and South Korea are also major exporters, while Canada and Mexico are deeply integrated into U.S. automakers’ supply chains.

The auto tariffs will hit Europe particularly hard, as the U.S. is its largest export market. The European auto industry supports nearly 14 million jobs.

The EU’s top trade official, Maros Sefcovic, has traveled to Washington at least twice since Trump’s re-election to engage with the administration. However, the Trump administration says its tariffs—which the White House claims will generate $100 billion in annual revenue—are “permanent.”