WASHINGTON — President Donald Trump announced 25% tariffs on autos not produced in the United States on Wednesday afternoon.

The announcement came after days of swirling speculation about how the president will levy "reciprocal tariffs" on U.S. trading partners. The administration has repeatedly said those tariffs will take effect April 2, with Trump referring to that day as "Liberation Day" for the American economy.

Any U.S. tariffs affecting motor vehicles and their supply chains could have massive implications for the industry globally and in the United States. The auto industry drives $1.2 trillion in U.S. economic activity annually, according to the Alliance for Automotive Innovation.

Stocks across the auto industry — including for Michigan automakers Ford Motor Co., General Motors Co. and Stellantis NV — were sharply down initially as word of the tariff announcement spread. At the close of the day's trading, GM and Stellantis shares had lost more than 3% each, while Ford had recovered to post a slight gain.

The entire industry will likely face severe consequences, from higher vehicle prices to supply chain breakdowns, if the tariffs are substantial and last for a prolonged time.

The Wall Street Journal reported that the White House is weighing plans for tariffs that apply to finished autos but not parts, citing comments from Republican U.S. Sen. Bernie Moreno of Ohio and other people familiar with the matter. A similar report from Bloomberg News had already caused share prices for several large suppliers such as Magna International Inc., Lear Corporation and Adient PLC to rise dramatically early Wednesday afternoon.

Glenn Stevens, executive director of the Detroit Regional Chamber’s MichAuto association, said in a phone interview last week that "there's a real fear that there's going to be failures in the supply chain. This is a very precarious thing you're doing not just with an industry but an economy."

The impacts of Trump's announcement will depend on the details of which countries are targeted, how high the tariffs are and whether there will be an exemption for vehicles or parts that comply with the U.S.-Mexico-Canada free trade agreement that Trump negotiated during his first term.

Parts often cross between the three North American countries several times in the vehicle manufacturing process, even when cars or trucks are assembled and completed in the United States. Earlier this month, Trump levied 25% blanket tariffs on the U.S. neighbors before granting an exemption for USMCA goods, in part thanks to lobbying from executives of the Detroit Three.

Japan, South Korea and Germany round out the top five in exports of finished vehicles to the United States. Neither of the Asian countries apply tariffs to U.S. vehicles, while Germany and the rest of the European Union have 10% tariffs for U.S. autos.

Industry observers have noted that those rates alone might not be great predictors of the Trump administration's plans.

In February, the president directed a sweeping investigation into what his administration calls "non-reciprocal trading arrangements." Those arrangements include tariffs that make U.S. goods more expensive abroad and non-tariff elements, like taxes that make all goods more expensive.

Japan — despite having no tariffs — imports relatively few U.S.-made vehicles or parts, according to the nonpartisan Congressional Research Service.

"Japan argues that this reflects U.S. producers’ failure to cater to Japanese tastes," the group said in a 2024 report. "U.S. industry argues low exports stem from nontariff barriers, including discriminatory regulatory treatment."

South Korea, which has a free trade agreement with the United States, imported about $2 billion worth of U.S. automotive goods last year compared to more than $50 billion in exports.

GM has an extensive manufacturing footprint in the country. It produced more than 400,000 units in South Korea last year under the Chevrolet and Buick nameplates for eventual sale in the United States.

As for Europe, Trump has repeatedly threatened tariffs on the bloc. "We have a problem with the European Union," Trump told reporters on March 12. "They don't take our farm products. They don't take our cars. We take millions of cars, BMWs and Mercedes-Benz and Volkswagens and everything. We take millions of cars."

The United States tariffs most cars from outside North America at 2.5% and trucks at 25%, the latter a longstanding result of the 1960s-era "chicken tax" trade dispute with France and West Germany.

Many economists have predicted that heightened tariffs on vehicles could raise new vehicle prices — which already are transacting near $50,000 on average — by thousands more.

Trump, however, has long suggested that tariffs could be a tool to return more automotive manufacturing jobs to the United States.

"I think that the administration has a point in saying that tariffs don't always have the kind of economy impacts that economists say they do," Greta Peisch, the former general counsel for the Office of the U.S. Trade Representative under President Joe Biden, said in a Wednesday phone interview.

She added: "This is the real world, and you sometimes have to see how things play out."

Some in the auto industry have pointed to potential benefits of tariffs.

“I actually think there's some opportunities,” Lear Corp. president and CEO Ray Scott said last week about increasing the Southfield-based seating and electrical components supplier's modular assembly production in the United States because of the tariffs.

“With the modular solution we have, we could move that and scale that in a proper way in the United States," he said during the Wolfe Research Virtual Autos Summit. "So those type of discussions are being brought up where we can actually do assembly in the U.S. and certain key components.”

Leavitt, during the afternoon press briefing, reiterated past comments about tariffs and how Trump plans to wield them. April 2, she said, "will be a day where Americans finally see free and fair trade practices restored. We are no longer going to allow our allies, our competitors and our adversaries to take advantage of American workers."

"And if you think about your hometown in the state that you grew up, Main Street looks a lot different today than it did many years ago. And President Trump wants to restore America as a manufacturing superpower around the globe," Leavitt added.

The automotive tariff announcement is set to come amid a moment of heavy scrutiny for the Trump administration over its accidental disclosure of military planning information to a journalist and its communication outside proper channels.

The scandal has been widely referred to as Signalgate, a reference to the encrypted messaging app Signal and former President Richard Nixon's Watergate scandal.

During the briefing, Leavitt expressed frustration with reporters over their repeated questioning on the topic, suggesting that there are "a lot of different things going on in the world," including Trump's automotive tariff announcement.

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