The U.S. government is imposing a 25% tariff on all foreign-built cars, light-duty trucks and certain auto parts. This is a significant increase from the current rate of 2.5%. The tariff will take effect starting April 3, 2025, for vehicles, while auto parts will be taxed by May 3. The new policy applies to finished vehicles and select auto parts, including those from American brands manufactured abroad. Officials say the goal is to strengthen domestic manufacturing.

In 2024, the U.S. imported $219.49 billion in cars, a 4% year-over-year increase. Mexico was the largest supplier at $49.98 billion, followed by Japan at $40.76 billion, South Korea at $38 billion, Canada at $28.4 billion, and Germany at $25.59 billion.

Cox Automotive estimates vehicles from Mexico and Canada could cost $6,000 more, Reuters reports. Currently, 44% of new cars sold in the U.S. are imported. Some automakers could shift production to avoid the tariffs, but the long-term effects remain uncertain.

Source: American Shipper