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)

LEGE-CAP FERRET, France (AP) — Fire crews and planes wrestled Monday to bring a monster wildfire under control in southwest France before a forecast jump in temperatures complicates the massive firefighting effort against a blaze that has burned an area four times the size of Paris.

Interior Minister Laurent Nunez said the fire had stopped growing, a first glimmer of hope since the inferno forced a staggering 220,000 people to flee in the region around the city of Bordeaux.

But with woodlands still smoldering, the minister cautioned that the battle isn't yet won.

“It hasn’t progressed during the night,” Nunez said. “We have to remain very concentrated, very determined, to go at any moment.”

He spoke after French President Emmanuel Macron held a crisis meeting Monday focused on the blaze in the Gironde region and wildfires that crews continue to tackle elsewhere.

The Gironde prefecture said the situation overnight remained “globally stable” — a change from previous days when officials said flames had crept to within 15 kilometers (10 miles) of the outskirts of Bordeaux, a historic city of 268,000 people, and generated self-feeding firestorms with lightning bolts that ignited more blazes.

No new evacuations were announced Monday. But with France about to enter its peak August tourist season, Gironde authorities worked to keep vacationers away, banning holiday camps for children and for people with disabilities. Nunez also urged people to avoid the region, popular for its Atlantic beaches and some of France's largest woodlands.

In the adjacent southwestern Landes region, where hundreds of firefighters have been making progress against another virulent but smaller fire, the prefecture said some rain fell overnight and described the conditions as “favorable” for firefighting but also cautioned that they could change.

With thousands of firefighters on the ground and rotations of water- and retardant-dropping aircraft, it became a race against time before an expected heat wave that could make fighting flames more difficult. The national weather service forecast temperatures above 35 C (95 F) in the southwest on Tuesday and likely higher on Wednesday.

“We know temperatures are going to climb again, that we'll enter a phase of intense heat and so we really have to remain very cautious,” Nunez said. “As long as the fire isn't contained, the situation remains unfavorable.”

Crews using earth movers tore up strips of forest and scrubland to create barren spaces, intended to stop fires from spreading. Farmers were keeping fire crews supplied with water, transporting it to them in tanks.

Around a dozen countries have provided planes, helicopters, firefighters and other assistance to both France and Spain, which is also fighting unprecedented blazes. All told, fires in the two countries have forced more than 330,000 people to flee.

Macron didn't immediately comment after the government crisis meeting he presided over. In a weekend post on X, he pledged long-term support for fire-hit communities, saying: “We will rebuild, we will repair and we will be present for as long as necessary.”

In Spain, wildfires have burned out of control around Madrid and in the Valencia region. Authorities evacuated 79,000 people and confined 30,000 others to their homes.

In both Spain and France, the exceptional scale of the fires — fueled by heat waves that hit especially hard and early this year, making forests and scrubland tinder-dry — are driving calls for stronger action against climate change.

“What we are experiencing is not a series of isolated incidents. It is the consequence of a climate emergency that is making wildfires even more violent, heat waves more frequent,” Spanish Prime Minister Pedro Sánchez said.

A fire raging in hilly, rural terrain in Ávila, west of Madrid, has become Spain’s largest on record, scorching 500 square kilometers (193 square miles), the government said. That's five times the size of Barcelona.

“Look at how the valley is burned. Look at the houses, the people," said David Gonzalez, a 48-year-old gardener who used his van to run supplies to firefighters in Ávila.

"We are feeling lot of anger and helplessness. It’s something inhuman,” he said.

Fires have burned 1,530 square kilometers (590 square miles) this year in Spain — six times the area scorched by blazes in the first half of 2025, said Sara Aagesen, the ecology minister.

The minister said that another heat wave forecast from Tuesday — which would be Spain’s fourth so far this year — could ratchet up the fire danger. Spain’s weather agency forecast temperatures above 40 C (104 F).

A wildfire driven by strong winds broke out on Sunday afternoon near Peschici, in Italy’s southern Puglia region, burning pine forest and scrub and forcing the evacuation of about 300 tourists from beaches and campgrounds, authorities said.

The Coast Guard evacuated tourists by sea to nearby Vieste, where authorities opened temporary shelters.

Three Canadair water-bombing planes and fire crews on the ground continued Monday to battle the blaze, which revived memories of devastating wildfires that hit the same coastal area in 2007.

Leicester reported from Paris. Associated Press writers Joseph Wilson in Barcelona, Iain Sullivan in El Tiemblo, Spain, and Giada Zampano in Rome contributed.

Firefighters suppress a blaze in a forest as wildfires rage near Le Las, outside Bordeaux, France, Monday, July 27, 2026. (AP Photo/Emma Da Silva)

Firefighters tackle a blaze as wildfires rage near Le Las, outside Bordeaux, France, Monday, July 27, 2026. (AP Photo/Emma Da Silva)

A De Havilland Canada DHC-8-400 Dash 8 operated by the French civil defense agency drops fire retardant as wildfires rage near Marcheprime, outside Bordeaux, France, Monday, July 27, 2026. (AP Photo/Emma Da Silva)

Firefighters battle a wildfire in San Martin de Valdeiglesias, west of Madrid, Spain, Sunday, July 26, 2026. (AP Photo/Manu Fernandez)

A firefighter gestures next to burning trees as a wildfire rages near Marcheprime, outside, Bordeaux, France, Sunday, July 26, 2026. (AP Photo/Emma Da Silva)

Firefighters battle a wildfire near Marcheprime, outside, Bordeaux, France, Sunday, July 26, 2026. (AP Photo/Emma Da Silva)

Firefighters battle a wildfire near Marcheprime, outside, Bordeaux, France, Sunday, July 26, 2026. (AP Photo/Emma Da Silva)

A woman caresses her pet dog at an emergency shelter set up in the Bordeaux Exhibition Centre in Bordeaux, France, for those that had to leave their homes outside town due to the raging wildfires, Sunday, July 26, 2026. (AP Photo/Caroline Blumberg)

A fire engine drives through smoke of a wildfire raging near Marcheprime, outside, Bordeaux, France, Sunday, July 26, 2026. (AP Photo/Emma Da Silva)