Trump Declares 25% Tariff on Foreign Vehicles, Auto Stocks and Wall Street React Sharply

By: DailyForex.pk News Desk

In a bold escalation of trade policy, U.S. President Donald Trump announced on Wednesday a 25% tariff on all foreign-made cars and light trucks, set to take effect on April 2, 2025. The move triggered an immediate selloff in auto stocks and rattled broader U.S. markets.

Trump’s Tariff Move Aims to Boost Domestic Auto Manufacturing

Speaking at the White House, Trump said,

“What we’re going to be doing is a 25% tariff on all cars that are not made in the United States… Business is coming back to the United States so that they don’t have to pay tariffs.”

The announcement forms part of Trump’s wider protectionist agenda, aimed at forcing global automakers to shift production to the U.S. and bring jobs back home. The President added that the tariffs would “spur growth like you haven’t seen before.”

As a response, Hyundai (HYMTF) revealed a $21 billion investment plan in the U.S., including $5.8 billion allocated to building a new steel plant in Louisiana, expected to create around 1,500 new jobs. Hyundai also aims to increase its U.S. production by 200,000 vehicles annually.

Trump’s administration projects that these new tariffs could generate $100 billion in annual revenue, though the burden is expected to fall on U.S. importers — a move that could inflate car prices, disrupt supply chains, and add upward pressure on inflation.

Auto Stocks Drop, Wall Street Retreats

U.S. automakers and foreign car manufacturers saw significant losses in after-hours trading:

• General Motors (GM): –6.3%
• Ford (F): –5.1%
• Stellantis (STLA): –7.8%
• Toyota (TM), Honda (HMC), Ferrari (RACE): down between –1% and –3%
• Tesla (TSLA): dipped over 5%, later stabilized

The broader U.S. stock market also declined, as investors grew cautious ahead of Trump’s broader “Reciprocal Tariff Plan”, which is also due on April 2. Trump has labeled it as “Liberation Day” and is expected to impose additional tariffs targeting at least 15 countries.

Concerns Mount Over Inflation and Growth

The Federal Reserve and market analysts have raised red flags over the economic implications of these protectionist measures. The fear is that tariffs will reduce consumer purchasing power, slow down business activity, and fuel persistent inflationary pressure.

To counteract some of the potential fallout, Trump stated he would ask Congress to make interest payments on U.S.-made cars tax-deductible, in a bid to further incentivize domestic production.

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