Trump Tariff Announcement: US to Impose 25% Tariff on All Foreign Cars

Trump Tariffs: All imported cars to the US will now face a straight 25% tariff rate starting April 3. While the automobile industry was already expecting a similar move, the official announcement has now provided a confirmation.

The United Autoworkers (UAW) union has backed US President Donald Trump’s auto tariffs, claiming they could help recover jobs lost to Mexico and Canada over the years. "It's our declaration of independence," Trump said while addressing the crowd in the White House Rose Garden.

"For decades, our country has been looted, pillaged, and plundered by nations near and far, both friend and foe alike. American steelworkers, auto workers, farmers and skilled craftsmen, they suffered gravely. They watched in anguish as foreign leaders stole their jobs," Trump said.

"Foreign cheaters have ransacked our factories, and foreign scavengers have torn apart our once beautiful American dream. Our country and its tax payers have been ripped off for more than 50 years, but it is not going to happen anymore," Trump continued.

The US President has also imposed a 26% tariff rate on all Indian imports. For China and the European Union, the tariff rate stands at 34% and 20%, respectively.

Impact of Tariffs

India currently has a small presence in the US auto component import market, accounting for only about 2% of total imports. Countries like Mexico (39%), Canada (13%) and China (12%) are the dominant suppliers in the sector.

"Currently, the exports to the US constitute 2.3% of India's GDP. Imposition of these tariffs will have an immediate direct impact on sectors such as automobiles, chemicals, and gems & jewellery," said Sankar Chakraborti, MD and CEO, Acuité Ratings and Research.

The direct export losses are projected at 0.1% of GDP (Rs 3,200 – Rs 3,500 crore), which is not a major one. The large-scale trade volatility might turn the FPIs erratically risk-averse, which may result in further Rupee depreciation, widening our current account deficit, Chakraborti further added.