President Donald Trump signed a proclamation Wednesday levying an additional 25 percent tariffs on imports of cars and light trucks, sending car company stocks lower.
“So we’ll effectively be charging a 25 percent tariff, but if you build your car in the United States, there’s no tariff,” Trump said to reporters Wednesday at the White House. “I think our automobile business will flourish like it’s never flourished before.”
The tariffs will be “permanent,” Trump said. A White House aide said the move would raise $100 billion in revenue in the first year. A White House official said on a press call after the announcement that the tariffs would take effect April 3.
In anticipation of the announcement, Tesla Inc. stock dropped nearly 5.6 percent Wednesday, General Motors Co. was down 3.1 percent and Ford Motor Co. fell, though it recovered to close just up on the day. Trump made the announcement after the market closed.
Trump said he hadn’t discussed the tariffs with his adviser Elon Musk, who is Tesla’s CEO.
“I think [the tariffs] may, it could be a net neutral, or they may be good,” Trump said, noting that Musk has plants in Texas and California. “Anybody that has plants in the United States is going to be good for, in my opinion.”
Trump said that the tariffs will bring car manufacturing back to the U.S.
“Right from the beginning, you’re going to have a lot of construction jobs, but you’re also going to have a lot of automobile jobs,” Trump said.
The tariffs on autos and auto parts will be imposed under Section 232 of a 1962 trade law that allows tariffs to be imposed for national security reasons, according to a White House official. The tariffs are on top of other tariffs, fees and charges, the official said.
This means it will be added to the 2.5 percent auto tariff and the 25 percent tariff on light trucks.
Peter Navarro, the White House senior counselor for trade and manufacturing, said that “only 19 percent of the engines in the cars that are sold in America are U.S. made, only 19 percent.”
The announcement is another change in Trump’s policy on auto tariffs. He initially said he would levy a 25 percent tariff on goods imports, including cars, from Canada and Mexico on March 4, but under pressure from the auto industry amended those orders within days to exclude products that fell under the 2020 U.S.-Mexico-Canada Agreement on trade.
The White House official said vehicles coming into the U.S. under the USMCA will face tariffs based on the foreign-parts content. If 50 percent of a car is made with foreign parts, the tariff would be 12.5 percent, the official said.
The administration is expected to announce reciprocal tariffs on U.S. trade partners on April 2, which Trump has dubbed “liberation day.”
“We’re going to be very fair,” Trump said. “Actually, we have not been treated nicely by other countries, but we’re going to be nice.” He said the reciprocal tariffs will be for “all countries.”
Trump signed an executive order Monday that levied a 25 percent tariffs on goods imports from all countries that buy Venezuelan oil.
He said Wednesday he wants to implement tariffs on pharmaceuticals, but he didn’t provide specifics.
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