Trump activates 25% tariffs: US auto industry in turmoil!

Trump activates 25% tariffs: US auto industry in turmoil!

On May 3, 2025, tariffs on certain auto parts announced by President Trump came into force in the United States. These tariffs amount to 25 percent and apply to imported vehicles and components, with one exception: manufacturers that assemble their vehicles in the USA can have part of the tariffs refunded. This was decided to promote local production and strengthen the competitiveness of the US automotive industry.

A tax of 25 percent on imported cars came into force in April 2025. While Trump described the tariffs as “small assistance” during a “short transition phase,” he emphasized that in principle 25 percent must be paid. However, for auto parts, there are no additional tariffs on aluminum and steel to avoid double taxation.

Customs allowances and exceptions

Aside from customs duties, there are regulations for vehicle parts that are assembled in the USA. According to an executive order Trump signed on April 29, 2025, these parts will receive a tariff rebate of 3.75 percent of the suggested retail price (MSRP) for U.S.-produced vehicles from April 3, 2025 to April 30, 2026. The following year, that rate drops to 2.5 percent before the tariff rebates expire.

It's important to note that vehicles with 85 percent U.S. or USMCA content will not pay tariffs in the first year. On the other hand, vehicles that have a mixed form in which 50 percent of the parts are imported must pay 35 percent tariffs on these parts. There are special regulations, particularly with regard to auto parts producing countries such as Canada and Mexico: auto parts that are produced within the framework of the USMCA trade agreement are exempt from the 25 percent tariffs.

Additional customs duties and safety investigations

In addition to the underlying tariffs on automotive parts, Trump also plans sector-specific tariffs on semiconductors and a reassessment of the electronics value chain. This could impact a wide range of electronics, including smartphones and laptops. Tariffs on pharmaceutical products are also being considered, although details of these planned measures are not yet known.

On April 15, 2025, Trump initiated an investigation under Section 232 of the Trade Expansion Act of 1962 to assess U.S. dependence on imports of critical minerals and their derivatives. If the investigation determines that these imports pose a threat to national security, additional tariffs could be announced.

Amid these developments, the EU has called on the US to find a common solution to the tariff conflict and is open to an agreement to mutually eliminate tariffs on industrial goods. These discussions could have significant implications for future trade relations.