Trump Imposes 25% tariffs on Car Imports to the US

US President Donald Trump has introduced a 25% import tax on cars and car parts entering the country, a move that could escalate the global trade conflict.

Trump stated that the new tariffs would take effect on April 2, with fees on vehicle imports beginning the following day, while charges on parts are expected to start in May or later.

The president argued that the tariffs would result in "tremendous growth" for the automotive industry, boosting jobs and investment in the US.

However, experts warn that the decision could lead to temporary closures of major car production plants in the US, higher prices for consumers, and strained relations with US allies.

The US imported around eight million cars last year, which amounted to some $240 billion worth of trade and nearly half the total annual sales for the nation.

Mexico, South Korea, Japan, Canada, and Germany were the biggest to least imports of cars to the US. Such developments by Trump leads to higher disruption in global car trade and supply chains."

Several US automakers have operations in Mexico and Canada, established under the long-standing free trade agreement between the three countries.

The White House stated that the new tariffs would apply not only to finished vehicles but also to car parts, which are often shipped from other countries before being assembled in the US.

However, tariffs on parts from Canada and Mexico will be temporarily exempt while US Customs and Border Protection develops a system to assess the duties. The two neighboring countries see billions of dollars in goods crossing their borders daily.

First, the president's announcement plunged shares of General Motors down about 3%, since the malaise spread to other carmakers, especially Ford's. Asked during a press conference if there were any chances of a reversal of the decision, Trump replied, "No," and later added, "This is permanent."

 "There is no tariff if you build your car in the United States," he said.

Japanese Prime Minister Shigeru Ishiba said that there would be "all options" considered by his government. Japan has several major players in its automotive industry, being the world's second-largest car exporter immediately after Germany.

Share prices of the Japanese car manufacturers - Toyota, Nissan, and Honda - fell in early Tokyo trading. Tariff means tax on the imports imposed by the government, in this case, by the USA, and the company bringing the goods into the country pays it.

Trump has utilized this tool to seemingly place some tariffs on all goods coming into the USA as a part of his grander scheme to support American business and foster local manufacturing. Although tariffs help local businesses, they also increase costs for those firms that depend on foreign parts to manufacture their products, automobile manufacturers.

Analysts from Anderson Economic Group have calculated that individual cars might increase by thousands, with a hefty possible increase of $4,000-$10,000 per car due to 25 percent tariffs on parts from Mexico and Canada alone, depending on the vehicle.