President Donald Trump signed an executive order Wednesday confirming his plan to enact a 25% tariff on all new vehicles and parts imported from outside the United States. The tariff is intended to go into effect next week on April 3.
The President initially announced his tariffs on imported vehicles and parts earlier this month before eventually delaying the action until April after a call with executives from Ford, General Motors and Stellantis.
In Wednesday's executive order, Trump cited a February 2019 report in which former Secretary of Commerce Wilbur Ross reported the growing share of imported componentry and vehicles in America's auto sector, and their impact on the industry's overall health.
"In recent years, American-owned automotive manufacturers have experienced numerous supply chain challenges, including material and parts input shortages, labor shortages and strikes and electrical-component shortages," the executive order states. "Meanwhile, foreign automotive industries, propelled by unfair subsidies and aggressive industrial policies, have grown substantially. Today, only about half of the vehicles sold in the United States are manufactured domestically, a decline that jeopardizes our domestic industrial base and national security."
[RELATED: Trump’s mercurial tariff policy ‘a big frigging deal’]
At this point, it is unclear if the President's actions impact the commercial vehicle sector as well, or are focused exclusively on the auto market. Similar uncertainty was found in March when the tariff was initially announced.
The markets and auto manufacturers and expectedly reacted to Wednesday's news with concern. The Big 3 automakers all saw their stock prices slip Thursday morning, while Jennifer Safavian, president and CEO of Autos Drive America, stated, "At a time when cost is the number one concern for American car buyers, U.S. automakers are working to provide a range of affordable vehicles for consumers. The tariffs imposed today will make it more expensive to produce and sell cars in the United States, ultimately leading to higher prices, fewer options for consumers, and fewer manufacturing jobs in the U.S."
