| Thanks for reading Hyperdrive, Bloomberg's newsletter on the future of the auto world. Read today's featured story online here. US President Donald Trump signed a proclamation to implement a 25% tariff on auto imports and pledged harsher punishment on the EU and Canada if they join forces against the US, expanding a trade war and triggering threats of retaliation. "What we're going to be doing is a 25% tariff on all cars that are not made in the United States," Trump said at the White House on Wednesday as he pushed ahead with a program seeking to bring more manufacturing jobs to the US. Hours later, Trump suggested further tariffs would be imposed on the European Union and Canada if they worked together "to do economic harm" to the US. The reaction in currency markets including the euro and Canadian dollar was muted. Taken together, Trump's escalating trade actions appear likely to deepen tensions with key trading partners even before his promised so-called reciprocal tariffs on April 2.  US President Donald Trump. Photographer: Francis Chung/Politico The auto tariffs will come into effect at 12:01 a.m. Washington time on April 3, initially targeting fully assembled vehicles. By May 3, the scope will expand to include major automobile parts like engines, transmissions, powertrain components, and electrical systems, with the potential to broaden further as necessary, according to the proclamation. Read More: Trump's Trade War and the Economic Impact Around the world, automaker shares dropped as a result, with Toyota's stock falling 2% in Tokyo, and Porsche and Mercedes-Benz shares sliding as much as 4.7% in Frankfurt. General Motors was down 6.5% in pre-market trading, while Ford declined 2.6%. Tesla, one of the only winners from the tariffs, inched 0.4% higher. The MSCI World Automobiles Index has tumbled more than a fifth this year. Trump cast the tariffs as "permanent" and said he was not interested in negotiating exceptions. They'll come on top of levies already in place, White House Staff Secretary Will Scharf said, and the administration projects that the duties would result in $100 billion of new annual revenue to the US. The EU swiftly criticized Trump's latest move, with European Commission President Ursula von der Leyen warning that Europe would defend its economic interests while continuing to pursue diplomatic solutions. "We will now assess this announcement, together with other measures the US is envisaging in the next days," von der Leyen said in a statement. Ontario Premier Doug Ford, the leader of the province that's the home of most of Canada's auto industry, said it was virtually guaranteed that Canada would retaliate. He urged Prime Minister Mark Carney to "target American cars" — US-manufactured vehicles have a dominant share of the Canadian vehicle market. Japanese Prime Minister Shigeru Ishiba said he won't rule out countermeasures, while South Korea's government said it will come up with emergency measures to help the auto industry. The auto tariff was unveiled ahead of an even broader announcement of so-called reciprocal tariffs expected April 2 — a bid to drive down other countries' barriers and shrink US trade deficits. Those tariffs will see the US apply rates on a country-by-country basis to counter barriers levied on American imports. Trump, though, has signaled some trading partners may receive possible exemptions or reductions in duties. A White House official, discussing the tariffs on the condition of anonymity, said the administration would develop a plan to deal with parts that cross the border multiple times. The auto levies mark a significant expansion of the president's trade fight, and likely ensnare some of the biggest brands in countries including Japan, Germany and South Korea, all major US trading partners. The move risks disrupting operations for North American automakers, which rely on highly integrated chains across the US, Mexico and Canada. Still, the tariffs will hit the non-US content in some of Detroit's most recognizable and profitable models. GM imports some Chevrolet Silverado pickup trucks from plants in Mexico and Canada, while Stellantis makes models including the Jeep Compass SUV in Mexico. Ford produces a larger share of its US sales domestically than its Detroit rivals, but it won't be spared. It builds the entry-level Maverick small pickup in Mexico as well as the Bronco Sport SUV.  Ford Bronco Sport vehicles at a Ford dealership in Los Angeles. Photographer: Eric Thayer/Bloomberg Autos Drive America, which lobbies for carmakers based outside the US including Toyota and BMW, warned the new levies will do the opposite of what Trump wants. "The tariffs imposed today will make it more expensive to produce and sell cars in the United States, ultimately leading to higher prices, fewer options for consumers and fewer manufacturing jobs in the US," Jennifer Safavian, the group's president, said in a statement. Trump, though, has argued the tariffs will help spur growth in the domestic auto sector and force companies to move more production to the US. "Before I was elected, we were losing all of our plants that were being built in Mexico and Canada and other places. Now those plants largely have stopped and they're moving them to our country," he said. Analysts have estimated that new tariffs could increase new-car prices by thousands of dollars per vehicle. One recent study found that tariffs on Canada, Mexico and China would raise the cost to produce a crossover vehicle by about $4,000, while a US-made EV would jump by about $12,000. Trump is betting that his tariff moves will remake US industry and has claimed his approach is already working. Just this week, he hosted executives from Hyundai at the White House and hailed the South Korean automaker's $21 billion US expansion plan as "a clear demonstration that tariffs very strongly work." But Trump's imposition of trade duties has been erratic, marked by delays and suspensions as he extracts policy concessions from trading partners. Those shifts have rattled markets and made business leaders uneasy as they face investment and hiring decisions. Trump imposed 25% tariffs on imports from Mexico and Canada earlier in March but delayed those for a month on goods — including automobiles and parts — that are covered by the North American trade deal USMCA. Auto executives from Detroit's Big Three had lobbied Trump for relief, saying they needed more time to adapt given the close integration of the sector across the continent. — By Jennifer A. Dlouhy, Josh Wingrove, Joe Deaux and Gabrielle Coppola - Porsche, Mercedes face $3.7 billion hit from Trump's duties.
- Musk's Tesla is one of the only winners in the escalating trade spat.
Car repossessions surged last year to the most since 2009, a sign that mounting consumer stress is reverberating through the US economy. In 2024, roughly 1.73 million vehicles were seized, according to data from Cox Automotive, up 16% from the year prior and 43% compared with 2022. The last time repos hit this level the US economy was reeling from the financial crisis. The figures are another indication that consumers are struggling to keep up with their monthly bills, thanks to both elevated interest rates and the lingering effects of higher car prices. | 
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