Trump's latest auto tariffs explained: What car buyers should know this year

DETROIT (AP) — President Donald Trump’s 25% tax on imported cars, light trucks and auto parts is likely to drive up prices at a time when many Americans already struggle to afford a new set of wheels. The tariffs will also force car companies to rethink what cars they make and where they make them.

Trump has been itching to tax foreign autos for years. In his first term, he declared auto imports a threat to national security, which gave him the authority to impose tariffs on them. On Wednesday, he went ahead and imposed the levies. They take effect midnight April 3.

It's the latest in a number of auto industry maneuvers by Trump during his first weeks back in the White House. Auto companies are also navigating the reversal of fuel economy standards, dialed down greenhouse gas emission standards and a host of electric vehicle policy rollbacks.

Some of the details of Trump's auto tariffs have yet to be worked out.

For example, it’s unclear whether the new auto tariffs would stack on top of 25% import taxes set to be levied next week on all goods from Canada and Mexico. That would mean cars from Canada and Mexico could potentially face new tariffs of 50%.

And for now, the Trump administration is exempting from the tariffs cars, light trucks and auto parts that qualify for duty-free treatment under the US-Mexico-Canada Agreement, a regional trade pact the president negotiated five years ago. Trump intends to narrow that exemption to content made in the United States, not Canada or Mexico. But that will require setting up processes to determine what qualifies as U.S.-made — something that could take weeks or months.

The White House also said the import tax would apply to “key'' auto parts, including engines, transmissions, powertrain parts and electrical components. And it could expand the tariffs to other auto parts “if necessary.’’

Here’s what else to know:

As automakers expanded globally, they created complicated and efficient supply chains that spanned countries. In North America, for instance, Mexico supplies low-wage labor and makes smaller, less expensive cars and trucks while Canada and the United States provide more skilled labor and technological know-how.

Trump's tariffs are intended to bring auto manufacturing back to the United States. But it won't be easy.

Rerouting the sourcing of thousands of parts that are imported to the U.S. and uprooting assembly operations would take years.

“It adds to the uncertainty facing all automakers as the industry’s supply chain is inherently global and has optimized around moving components across national borders where free trade agreements have existed in the past,” said John Paul MacDuffie, professor of management at the University of Pennsylvania.

Sam Fiorani, analyst at AutoForecast Solutions, notes that while European makers of luxury vehicles and their buyers can afford some price adjustments, "it’s the companies like Toyota, Mazda, and Subaru who import large percentages of their fleets that will take a beating.”

“Throwing tariffs on the parts of vehicles built in Mexico and Canada that aren’t sourced from the United States will hurt the profits of General Motors, Stellantis, and Ford over the next few quarters, costing them billions," he added.

Trump's tariffs — which he insists are permanent — will force companies to make hard choices.

“It’s going to have the effect of forcing companies to increase U.S. content’’ if they want to dodge the import taxes, said Richard Mojica, a trade attorney with Miller & Chevalier.

And even though Vanessa Miller, chair of the automotive team at the law firm Foley & Lardner, acknowledges that some companies will be able to pivot operations to the U.S., others are too tied to factories in Mexico or elsewhere to make the move anytime soon.

Automakers might have to stop making some vehicles because they won't be profitable with the tariffs in place. The tariffs hit "everyone in a manner that makes them rethink everything,’’ said Ivan Drury of the automotive website Edmunds. “This is around at least three or four years. We’re not looking at something you can just ride out.’’

Beata Caranci and Andrew Foran of TD Economics estimate that the tariffs could raise the average price of cars and light trucks in the United States — which totaled more than $47,000 last month — by up to $5,000 if automakers pass along the entire cost to consumers. That price hike could go higher – to as much as $10,000 – if the Trump administration applies the tax full to cars made in Mexico and Canada.

Automakers and their suppliers are only now recovering from years of instability brought on by pandemic-forced production halts, a sweeping semiconductor shortage and low inventory on dealership lots. That meant prices were sky-high, incentives were low and few deals were to be had.

During the peak of the pandemic, consumers still bought vehicles at high prices. But the piled-on tariffs could put new vehicles out of reach for many would-be buyers, especially given rising indications of potentially broader inflation ahead throughout the economy.

“Starting almost immediately, consumers will see their already expensive new vehicles cost hundreds to thousands more and those prices will escalate even more when the supplies of many key vehicles dwindle,” Fiorani said. “Imagine the price rises during the semiconductor shortage and stretch it out across every brand and manufacturer. The trickle-down effect will put smaller suppliers out of business and send many workers onto unemployment.”

By raising new vehicle prices, tariffs will likely send buyers to the used market. But with limited used inventory, an influx of buyers could rock used car prices, too. And they already average $25,000.

Lease penetration, or the number of vehicle transactions that are leases, has averaged around 30% or so over the past 10 years, according to Edmunds data.

But the industry saw low rates of leasing — nearly half the norm — particularly between May 2022 and January 2023. Fewer leased vehicles typically means fewer two- or three-year-old vehicles being put on the used-car market.

So there is likely to be a shortage of used cars just as more buyers start shopping for them.

Governor Matt Blunt, president of the American Automotive Policy Council, which represents U.S. automakers, said that manufacturers supported Trump's efforts to boost domestic auto manufacturing. But he cautioned that "it is critical that tariffs are implemented in a way that avoids raising prices for consumers and that preserves the competitiveness of the integrated North American automotive sector.

The United Auto Workers labor union applauded the tariffs. “Ending the race to the bottom in the auto industry starts with fixing our broken trade deals, and the Trump administration has made history with today’s actions,” UAW President Shawn Fain said in a statement. “These tariffs are a major step in the right direction for autoworkers and blue-collar communities across the country, and it is now on the automakers, from the Big Three to Volkswagen and beyond, to bring back good union jobs to the U.S.”

But Jennifer Safavian, president and CEO of Autos Drive America, which represents international auto manufacturers, denounced the tariffs: “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 U.S.”

Wiseman reported from Washington. Associated Press reporter Josh Boak contributed to this story.

Alexa St. John is an Associated Press climate reporter. Follow her on X: @alexa_stjohn. Reach her at ast.john@ap.org.

The Associated Press’ climate and environmental coverage receives financial support from multiple private foundations. AP is solely responsible for all content. Find AP’s standards for working with philanthropies, a list of supporters and funded coverage areas at AP.org.

New automobiles are loaded at the Port Newark Container Terminal in Newark, N.J., on Thursday, March 27, 2025. (AP Photo/Ted Shaffrey)

Two people shop at a Toyota dealership in El Monte, Calif., Thursday, March 27, 2025. (AP Photo/Jae C. Hong)

An aerial view shows auto dealerships in Cerritos, Calif., Thursday, March 27, 2025. (AP Photo/Jae C. Hong)

New German cars are stored at a logistic center in Duisburg, Germany, Thursday, March 27, 2025. (AP Photo/Martin Meissner)

New Toyota vehicles are stored at the Toyota Logistics Service, their most significant vehicle imports processing facility in North America, at the Port of Long Beach in Long Beach, Calif., Wednesday, March 26, 2025. (AP Photo/Damian Dovarganes)

President Donald Trump speaks to reporters in the Oval Office at the White House in Washington, Wednesday, March 26, 2025. (Pool via AP)

New vehicles are seen at an auto-processing facility at the Atlantic Terminal of the Port of Baltimore, Thursday, March 27, 2025, in Baltimore. (AP Photo/Stephanie Scarbrough)

HAVANA (AP) — Trumpets and drums played solemnly at Havana's airport Thursday as white-gloved Cuban soldiers marched out of a plane carrying urns with remains of the 32 Cuban officers killed during a stunning U.S. attack on Venezuela.

Nearby, thousands of Cubans lined one of Havana’s most iconic streets to await the bodies as the island remained under threat by the administration of U.S. President Donald Trump.

The soldiers' shoes clacked as they marched stiff-legged into the headquarters of the Ministry of the Armed Forces and placed the urns on a long table next to the pictures of those killed. Tens of thousands of people paid their respects, saluting the urns or holding their hand over their heart, many of them drenched from standing outside in a heavy downpour.

Thursday’s mass funeral was only one of a handful that the Cuban government has organized over the past half-century.

The soldiers were part of the security detail of Venezuelan President Nicolás Maduro during the Jan. 3 raid on his residence to seize the former leader and bring him to the U.S. to face drug trafficking charges.

State television also showed images of more than a dozen people it said were wounded combatants from the raid, accompanied by Cuban Foreign Minister Bruno Rodríguez after arriving Wednesday night from Venezuela. Some were in wheelchairs.

Tensions between Cuba and the U.S. have spiked, with Trump recently demanding that the Caribbean country make a deal with him before it is “too late.” He did not explain what kind of deal.

Trump also has said that Cuba will no longer live off Venezuela's money and oil. Experts warn that the abrupt end of oil shipments could be catastrophic for Cuba, which is already struggling with serious blackouts and a crumbling power grid.

Officials unfurled a massive flag at Havana's airport as President Miguel Díaz-Canel, clad in military garb, stood silent next to former President Raúl Castro, with what appeared to be the relatives of those killed looking on nearby.

Cuban Interior Minister Lázaro Alberto Álvarez Casas called the slain soldiers “heroes” of an anti-imperialist struggle spanning both Cuba and Venezuela. In an apparent reference to the U.S., he said the “enemy” speaks of “high-precision operations, of troops, of elites, of supremacy.

“We, on the other hand, speak of faces, of families who have lost a father, a son, a husband, a brother,” Álvarez said.

The events demonstrate that “imperialism may possess more sophisticated weapons; it may have immense material wealth; it may buy the minds of the wavering; but there is one thing it will never be able to buy: the dignity of the Cuban people,” he said.

Carmen Gómez, a 58-year-old industrial designer, was among the thousands of Cubans who lined a street where motorcycles and military vehicles thundered by with the remains of those killed.

“They are people willing to defend their principles and values, and we must pay tribute to them,” Gómez said, adding that she hopes no one invades her country. “It’s because of the sense of patriotism that Cubans have, and that will always unite us.”

The 32 military personnel ranged in age from 26 to 60 and were part of protection agreements between the two countries.

Officials in Cuba have said they expect a massive demonstration Friday across from the U.S. Embassy to protest the deaths.

“People are upset and hurt ... many do believe that the dead are martyrs” of a historic struggle against the United States, analyst and former diplomat Carlos Alzugaray told The Associated Press.

In October 1976, then-President Fidel Castro led a massive demonstration to bid farewell to the 73 people killed in the bombing of a civilian flight financed by anti-revolutionary leaders in the U.S. Most of the victims were Cuban athletes.

In December 1989, officials organized a ceremony to honor the more than 2,000 Cuban combatants who died in Angola during Cuba’s participation in a war that defeated the South African army.

In October 1997, memorial services were held following the arrival of the remains of guerrilla commander Ernesto “Che” Guevara and six of his comrades, who died in 1967.

The latest mass burial is critical to honor those slain, said José Luis Piñeiro, a 60-year-old doctor who lived for four years in Venezuela.

“I don’t think Trump is crazy enough to come and enter a country like this, ours, and if he does, he’s going to have to take an aspirin or some painkiller to avoid the headache he’s going to get,” Piñeiro said. “These were 32 heroes who fought him. Can you imagine an entire nation? He’s going to lose.”

The remains arrived a day after the U.S. announced $3 million in additional aid to help the island recover from the catastrophic Hurricane Melissa. The first flight took off on Wednesday, and a second flight was scheduled for Friday. A commercial vessel also will deliver food and other supplies.

Cuba had said on Wednesday that any contributions will be channeled through the government.

But U.S. State Department foreign assistance official Jeremy Lewin said Thursday that the U.S. was working with Cuba’s Catholic Church to distribute aid, as part of Washington's efforts to give assistance directly to the Cuban people.

“There’s nothing political about cans of tuna and rice and beans and pasta,” he said Thursday, warning that the Cuban government should not intervene or divert supplies. “We will be watching, and we will hold them accountable.”

Lewin said the Cuban government has a choice to: “Step down or better provide towards people.” Lewin added that “if there was no regime,” the U.S. would provide “billions and billions of dollars” in assistance, as well as investment and development: “That’s what lies on the other side of the regime for the Cuban people.”

Cuban Foreign Minister Bruno Rodríguez said the U.S. government was “exploiting what appears to be a humanitarian gesture for opportunistic and politically manipulative purposes.”

Coto contributed from San Juan, Puerto Rico.

Follow AP’s coverage of Latin America and the Caribbean at https://apnews.com/hub/latin-america

People line up outside the Ministry of the Revolutionary Armed Forces where the remains are on display of the Cuban officers who were killed during the U.S. operation in Venezuela that captured President Nicolas Maduro, as it sprinkles rain in Havana, Cuba, Thursday, Jan. 15, 2026. (AP Photo/Ramon Espinosa)

Military members line up outside the Ministry of the Revolutionary Armed Forces where the urns containing the remains of Cuban officers, killed during the U.S. operation in Venezuela that captured President Nicolas Maduro, are on display in Havana, Cuba, Thursday, Jan. 15, 2026. (AP Photo/Ramon Espinosa)

Military members pay their last respects to Cuban officers who were killed during the U.S. operation in Venezuela that captured Venezuelan President Nicolas Maduro, at the Ministry of the Revolutionary Armed Forces where the urns containing the remains are displayed during a ceremony in Havana, Cuba, Thursday, Jan. 15, 2026. (AP Photo/Ramon Espinosa)

A motorcade transports urns containing the remains of Cuban officers, who were killed during the U.S. operation in Venezuela that captured Venezuelan President Nicolas Maduro, through Havana, Cuba, Thursday, Jan. 15, 2026. (AP Photo/Ramon Espinosa)

Soldiers carry urns containing the remains of Cuban officers, who were killed during the U.S. operation in Venezuela that captured Venezuelan President Nicolas Maduro, at the Ministry of the Revolutionary Armed Forces in Havana, Cuba, Thursday, Jan. 15, 2026. (Adalberto Roque /Pool Photo via AP)

A motorcade transports urns containing the remains of Cuban officers, who were killed during the U.S. operation in Venezuela that captured Venezuelan President Nicolas Maduro, through Havana, Cuba, Thursday, Jan. 15, 2026. (AP Photo/Ramon Espinosa)

A motorcade transports urns containing the remains of Cuban officers, who were killed during the U.S. operation in Venezuela that captured Venezuelan President Nicolas Maduro, through Havana, Cuba, Thursday, Jan. 15, 2026. (AP Photo/Ramon Espinosa)

People line the streets of Havana, Cuba, Thursday, Jan. 15, 2026, to watch the motorcade carrying urns containing the remains of Cuban officers killed during the U.S. operation in Venezuela that captured Venezuelan President Nicolas Maduro. (AP Photo/Ramon Espinosa)

Workers fly the Cuban flag at half-staff at the Anti-Imperialist Tribune near the U.S. Embassy in Havana, Cuba, Monday, Jan. 5, 2026, in memory of Cubans who died two days before in Caracas, Venezuela during the capture of Venezuelan President Nicolas Maduro by U.S. forces. (AP Photo/Ramon Espinosa)