United States President Donald Trump has announced a sweeping 25% tariff on all passenger vehicles manufactured outside the United States. The new tariff will take effect on April 3, 2025, at 12:01 a.m. EDT. This includes sedans, SUVs, crossovers, minivans, cargo vans, and light trucks. Trump signed the executive directive during an Oval Office address, referring to the move as the beginning of “Liberation Day in America.”

“What we are going to be doing is a 25% tariff on all cars that are not made in the US. If they are made in the US there's absolutely no tariffs,” Trump said, confirming that the measure will be permanent. He also hinted at potential tax deductions on car loan interest for US-made vehicles and said reciprocal duties will apply but remain “lenient.”

Auto parts imports will receive a one-month exemption, with the tariff on those components set to begin no later than May 3, 2025, pending formal announcement in the Federal Register. Key auto parts such as engines, transmissions, powertrain parts, and electrical components will be affected, with possible expansion to additional components in the future.

Vehicles and parts that comply with the US-Mexico-Canada Agreement (USMCA) are temporarily exempt from the new tariffs. According to White House Deputy Press Secretary Harrison Fields, the exemption will remain until the Secretary of Commerce, in coordination with U.S. Customs and Border Protection (CBP), implements a procedure to determine the value of non-U.S. content in USMCA-compliant imports.

Importers of USMCA vehicles can submit documentation identifying the US content in each model. Tariffs may then apply only to the non-U.S. portion of the vehicle’s value, calculated by subtracting U.S. content from the total value.

The announcement marks a major shift in US trade and manufacturing policy, with broad implications for global carmakers and international trade dynamics.