Around eight million cars were imported into the US last year, around half the total sold in the market. Mexico will be the country hit hardest by the new levy. Car makers with production facilities in Mexico include BMW, Ford, Nissan, Volkswagen and Toyota. The US’s other top importers are Canada, Germany, Japan and South Korea.
Trump confirmed that the new laws were “permanent”, quashing any notion that they would be reversed. But he stated that “if you build your car in the United States, there is no tariff”.
The likes of BMW, Mercedes-Benz and Volkswagen already have plants in the US, building key models for both the US and other global markets. BMW’s Spartanburg plant in South Carolina, for example, builds the X3, X4, X5, X6, X7 and XM. It will be affected, though, because it builds and imports the 3 Series from Mexico for the US market.
Some car firms have announced investment to expand or open new US facilities in recent months in an effort to spread production globally and avoid tariffs. The Hyundai Motor Group, for example, has invested more than £16 billion to increase its vehicle production in the country, including a new steel manufacturing plant.
The news will come as a big blow to the likes of JLR, for which the US is its biggest market with firm recording big increases in Range Rover and Defender sales in recent years. Mini, too, will be hit, given its models are made in the UK and China.
Other car makers targeting the US that don’t have factories across the Atlantic include Cupra – although its models could be manufactured at other Volkswagen Group facilities in the US – and Lotus.
However, the move could also affect domestic US car makers and firms that currently manufacture vehicles there. GM, for example, manufactures a number of vehicles and car parts in Canada, China and Mexico that it then imports into the US, and those vehicles and parts would be hit by the tariffs.
This new tariff is the latest in a wave of levies introduced by Trump since he took office for the second time. He said he wants to protect businesses and manufacturers in the US.