Trump imposes 25% tariff on auto imports and parts, effective April 2

United States President Donald Trump on Wednesday announced 25% tariffs on auto imports and certain automobile parts to support domestic manufacturing.

The new tariff will be effective from April 2, and collection will start a day later.

In a fact sheet, the White House said that 25% would be levied on imported passenger vehicles such as sedans, crossovers, minivans, SUVs, cargo vans, and light trucks, as well as critical auto components like engines, powertrain parts, transmissions, and electrical components.

This tariff could also impact US carmakers who import parts from different countries.

"Importers of automobiles under the United States-Mexico-Canada Agreement will be given the opportunity to certify their U.S. content and systems will be implemented such that the 25% tariff will only apply to the value of their non-U.S. content," the White House said.

To impose new tariffs, Trump signed a proclamation invoking Section 232 of the Trade Expansion Act of 1962.

Will Scharf, Assistant to the President and White House Staff Secretary, said that the tariff would bring in "over $100 billion in new revenue."

Trump also reiterated that he will likely reduce taxes on car loans and asked US House Speaker Mike Johnson to include it in the forthcoming tax-cut package.

"We are trying to get (tax reduction on car loans) approved if we can,” he said.

Shares of New York Stock Exchange General Motors fell over 3%, while Ford shares settled marginally higher. Jeep and Chrysler owner Stellantis NV's stock declined more than 3.5%.