(Yahoo! Finance) - President Trump made good on his promise to impose tariffs on foreign automakers, imposing 25% duties on all cars and light trucks not made in the United States.
“This will continue to spur growth that you’ve never seen before," Trump said from the White House on Wednesday, signing an executive order putting the tariffs in place.
The 25% tariffs are set to take effect April 2 and add to existing tariffs. The White House estimates $100 billion in annual duties will be collected.
White House press secretary Karoline Leavitt said Trump would make the announcement earlier today during a news briefing with reporters. Shares of BMW (BMW.DE), Porsche (P911.DE), Volkswagen (VOW.DE) and Mercedes-Benz (MBG.DE) dropped following Leavitt's announcement, while GM, Stellantis, and Tesla (TSLA) traded lower in sympathy.
Though the new tariffs will hit mostly foreign automakers, domestic automakers, including the Big Three — Ford (F), GM (GM), and Stellantis (STLA) — are concerned about their impact too. GM, Ford, and Stellantis build vehicles in Canada, Mexico, and China, and they foresee higher production costs due to tariffs' effect on the auto supply chain.
While Wednesday's tariffs on the face of it only target finished auto products, existing tariffs on Chinese goods, for example, are affecting costs for domestic automotive production due to the number of parts imported from the country.
Trump has deemed April 2, the day on which he is slated to announce further tariffs, "Liberation Day" for the US, saying other countries have "ripped [us] off" and that any new tariffs are "reciprocal."
While the costs of the new auto tariffs on foreign imports is hard to quantify, analysis from various data firms suggest price hikes of $3,000 to as much as $12,000 for non-premium autos.
European automakers have suggested a range of options for dealing with tariffs. BMW says it will absorb the costs for a short time, while Porsche suggested it would pass on costs directly to consumers.
By Pras Subramanian - Senior Reporter
