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Trump’s “car world war”: who will suffer the most

Recently, US President Donald Trump announced the introduction of a 25% tariff on car imports, which has sparked a wave of discussion in the global media and economic circles. This step, which has already been dubbed the beginning of a “world war of automobiles,” could dramatically change the global automotive market. What is known about this initiative, what are its consequences, and how the world is reacting, "Komersant Ukrainian" analyzed

How it all started: Trump’s announcement

on March 26, 2025, Trump announced plans to impose duties on automotive imports to the United States, as reported by Reuters.

Trump emphasized that his administration is taking aggressive trade measures to support domestic producers.

“We are imposing a 25% duty on all cars that are not made in the United States. If they are made in the United States, there will be no duty. We are starting with the basic 2.5% that was in effect before and raising it to 25%. As you know and see, although it is not covered as accurately as it should be, this is a huge event – businesses are returning to the United States to avoid these duties,” the White House chief said.

He added that this decision will remain in effect until the end of his term.

What is known about the new tariffs

Date of introduction: the tariffs will take effect on April 3.

Who will beaffected: the duty will be levied on all imported cars and spare parts, regardless of the country of origin.

Expected revenue: Trump said that the US could receive up to $100 billion in tariff revenues.

Market reaction: panic among automakers

Trump’s announcement had an immediate impact on global markets.

Following the announcement, shares of leading American automakers plummeted: General Motors – by 6%, Toyota Motors – by 2.2%, Ford – by 4%, BMW – by 4.1%, and Tesla – by 1.2%.

Automotive parts manufacturers Aptiv and BorgWarner lost about 5% each.

It is worth noting that Tesla grew by 0.4%. Investors hope that the electric car maker will be less affected by the duties due to its predominantly US-based production.

Mexico is the largest importer of cars to the United States, followed by Japan, South Korea, the European Union and Canada.

Reuters notes that investors are concerned about the blow to global trade and corporate profits.

How it will affect prices and consumers

The duties could add several thousand dollars to the cost of a car in the United States, contradicting Trump’s campaign promise to reduce consumer prices.

Ferrari has announced a price increase of up to 10% on cars sold in the US, and other automakers have also warned that they may also raise prices.

JP Morgan said the tariffs would raise prices for new cars by $4,000 to $5,300.

According to Autoweek, the introduction of a 25% duty could lead to a significant increase in the cost of cars:

• A price increase of $12,000 for some models.
• A minimum price increase of $4,000 even for budget options.
• Limited choice of cars on the market, as manufacturers may reduce deliveries due to increased costs.

According to Cars.com, more than 50% of cars sold in the US in 2023 were imported. Some popular models that may be subject to the new duty include:

• Audi Q5
• Chevrolet Silverado 1500
• Ford Maverick
• Ford Mustang Mach-E
• Ram 1500 and 2500
• VW Jetta, Taos and Tiguan.

Car dealers fear job losses.

Will American automakers benefit from this?

Trump said that the duty would stimulate production in the United States:

• Automakers will build new plants or expand existing ones.
• At the same time, shares of General Motors, Ford, and Stellantis have already fallen after the tariffs were announced.

Jennifer Safavian, president of Autos Drive America, said:

“These tariffs will make it more expensive to produce and sell cars in the United States, resulting in higher prices for consumers and fewer manufacturing jobs.”

American car manufacturers may try to get the decision postponed or revised, but so far, Trump has no plans to change his position.

It should be noted that Tesla investors hope that the electric car maker will be less affected by the duties due to its predominantly US production.

EU reaction

European Commission President Ursula von der Leyen reacted to the US decision.

“I deeply regret the US decision to impose tariffs on EU car exports. Tariffs are taxes – bad for business, even worse for consumers, both in the US and in the EU,” she wrote on social media platform X.

According to her, the EU will continue to seek a solution through negotiations, protecting its economic interests.

Read also: EU imposes duties on goods from the US. What is known?

The world’s reaction

World leaders and automakers are still restrained in their official statements, but the panic on the stock exchanges speaks for itself.

Mexico, Japan, South Korea, Canada, and Germany are the largest suppliers of automotive imports to the United States, which totaled $474 billion in 2024.

The European Union and Japan are likely to prepare retaliatory measures, which could escalate the trade conflict.

Canadian Prime Minister Mark Carney said he would retaliate with trade action if U.S. President Donald Trump imposes new tariffs on cars, which have expanded the global trade war and hit stocks.

Carney said he has not yet determined what action Canada might take if Trump follows through with his plan to impose new 25% levies on imported cars and light trucks. He said he would respond next week, when the auto tariffs and a separate set of reciprocal tariffs for US trading partners are set to take effect.

Experts are already predicting “serious shocks” for the automotive industry.

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Why is it called the “automotive world war”?

The term “automotive world war” was coined because of the escalation of trade conflicts that Trump has been fomenting since 2018. Reuters calls it an “expanding global trade war.”

The new duties threaten not only foreign manufacturers but also American companies that depend on importing parts and assembling cars abroad.

Potential consequences:

1. For automakers. Foreign companies, such as German or Japanese brands, will be forced to either raise prices or move production to the United States, which will require billions of dollars in investment.
2. For the United States. American auto giants that import components may suffer losses due to the rise in supply chain costs.
3. For consumers. Experts predict an increase in car prices in the US, which will reduce affordability for the middle class.

Experts emphasize that the duties could backfire on American companies themselves, as many of them depend on the global market.

However, many trade experts expect prices to rise initially and demand to fall, hurting the global auto industry, which is already suffering from uncertainty caused by Trump’s rapid threats of tariffs and periodic cancellations.

Trump has said that he could hit the EU and Canada with more tariffs if they join forces to retaliate.

What’s next

These tariffs are only part of Trump’s broader tariff policy. New trade restrictions on various goods from key US partners are expected to be introduced on April 2.

For several weeks, Trump has been calling April 2 “Liberation Day,” which will bring new tariffs that could shake up the global trading system.

The White House announcement is scheduled for 22:00 Kyiv time.

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